Moderator: Jomosis, Geek Web3
Guests: Kevin He, Co-Founder of Bitlayer;
Baiyu，CKB Eco Fund Partner；
Kai，Research of Bool Network
On the evening of May 16, Geekweb3 invited guests from Bitlayer, CKB, and Bool Network to discuss many issues related to Bitcoin Layer 2 on Twitter Space. Many interesting topics were involved. Due to the large number of topics, the text version of the record is divided into two parts. The issues discussed in the second half include:
Compared with Ethereum, Bitcoin is not suitable as the first layer supporting the second layer. What are the obstacles it poses to the second layer?
The day before yesterday, the xlink cross-chain bridge was stolen for more than 4 million US dollars due to a key leak. The security of the cross-chain bridge, especially the withdrawal bridge, is one of the core issues of Layer2. How does your team solve the withdrawal bridge security issue?
Both the Lightning Network and the RGB Protocol were once highly anticipated, but the results in terms of ecosystem construction have been disappointing. What are your opinions?
In the current Bitcoin Layer 2 ecosystem, which projects are superior in terms of technology or comprehensive narrative? Why?
If Bitcoin Layer 2 wants to become as popular as Ethereum Layer 2, how many problems will it need to solve?
During the discussion, guests frequently made golden sentences. Teacher Baiyu said frankly: "I think the biggest obstacle for the Bitcoin ecosystem is that Ethereum is too successful, and many people's minds are imprinted with ideas from Ethereum."
Since the text version contains too much content, we have divided it into two parts. You are welcome to read the second half and absorb inspiration from the wonderful speeches of the guests.
1. Jomosis: Bitcoin is not suitable as a layer 1 supporting layer 2. What are the obstacles it poses to layer 2?
Kevin: It is mainly reflected in the obstacles to the implementation of Layer2 technology. I personally think that the key to the second layer depends on whether the big players, especially the whales, recognize you and whether they think you are safe. But as far as I know, many big players or whales are still unwilling to bring BTC to the second layer, or are unwilling to enter this unreliable interest-earning channel, and of course they often don’t trust CEX.
In fact, we can also see some ReStaking projects like Babylon, which have relatively clear security models and can actually solve some problems. They are gradually recognized by Bitcoin holders and even institutional investors, allowing more people to see that Bitcoin can go to the second layer or to another area in a safe way, and be locked in another place on the original chain to earn interest. At the user cognition level, everyone has gradually accepted this narrative.
Let's get back to our original question. From a technical point of view, the reason why there are so many schools of thought now is mainly due to the limitations of Bitcoin itself. Specifically, the Bitcoin chain lacks verification capabilities. When it lacks verification capabilities, your two-way cross-chain bridge, especially when returning from Layer 2 to Layer 1, will find it difficult to verify that a withdrawal has ever occurred in Layer 2, which will make it difficult to implement secure two-way cross-chain.
At the same time, under the UTXO model design, each UTXO is an independent parallel space, and it is difficult to realize the scenario of mutual association. Functions like Covenants have not yet been recognized by the community.
Another point is that Bitcoin has no global state. When there is no global state, many functions such as escape warehouses and forced withdrawals, and even scenarios where the next operation or response is performed based on certain verification results cannot be realized. Transactions can only be read through an off-chain indexer or a light node, or reverse indexed or reversely linked through specific transaction methods.
To sum up, people's understanding of Bitcoin and the second layer still needs to move forward, and there is still a need for breakthroughs in technology. For example, CKB will have innovations like the Cell model, and BitVM will try to verify it on Bitcoin, which will make the Bitcoin ecosystem very different and better than before.
Baiyu: I think the biggest obstacle is that Ethereum is too successful, and many people have been imprinted with ideas from Ethereum. Ethereum was very avant-garde back then, breaking through the Bitcoin fundamentalist community and telling everyone that blockchain can be used as a smart contract platform. Then it abandoned UTXO and used an account model.
Although Ethereum seemed very avant-garde back then, after so many years, we have to find that the most suitable application for Ethereum is financial applications. Even the founder admitted that this is a highly financialized world. It seems that the only non-financial large-scale application is ENS. Then ENS was pulled down by Vitalik Buterin’s words at the time, which is the most ironic thing.
At present, when we want to build the Bitcoin ecosystem, we still habitually move things from Ethereum. Everyone is working hard to build the Bitcoin ecosystem, and we don’t know when we will be swayed by the words of the existing forces in Ethereum. A few days ago, I met a friend and wanted him to join the North American team of CKB, but he has been in the Ethereum community for a long time. After listening to my ideas, he finally asked me a question: These things are all on Ethereum, why do you want to go to the Bitcoin ecosystem?
In fact, many elites have the same idea as him, thinking that all the things that Bitcoin ecosystem does, Ethereum has, so why do we need to go to Bitcoin? Why do we need to start all over again? I am actually tired of hearing such questions, so I think the most important thing in this round is to think about how to use the Bitcoin ecosystem to do things that the Ethereum ecosystem cannot do. Ethereum changes every day, and in the end it is still Staking and Restaking, so do we still have to do the same in the Bitcoin ecosystem?
I think getting rid of the Ethereum-style ideological stamp is the key, and it is also the biggest problem hindering the flow of talent into the Bitcoin ecosystem. How to attract the best talents and the smartest minds to build the Bitcoin ecosystem and continue to advance the blockchain.
2. Jomosis: A few days ago, the xlink cross-chain bridge was stolen for more than 4 million US dollars due to key leakage. The security of the cross-chain bridge, especially the withdrawal bridge, is one of the core issues of Layer2. Many Layer2s still simply use multi-signature bridges, which are prone to internal collusion or external attacks. Here, I would like the guests to introduce how their teams solve the withdrawal bridge security problem?
Kai: To put it bluntly, the problem with Bitcoin cross-chain bridges is that, limited by the non-Turing-complete nature of Bitcoin scripts, if we copy the Ethereum mechanism, we cannot do some verification calculations on the Bitcoin chain. Based on this problem, we at Bool Network have also thought a lot about it. The simplest way is to make each second layer a centralized CEX. When a two-way cross-chain is required, the decentralized asset custodian can manage the cross-chain transactions.
Bool Network continues this line of thinking, which is how to make asset custodians more decentralized. Based on this thinking, the first step to solve is the security of witnesses of the cross-chain bridge, which can be achieved through permissionless access through POS. Then we dynamically select witnesses of the cross-chain bridge from the Bool network based on TEE, MPC and our own RingVRF. In short, among the 200 nodes, a few nodes are randomly selected through an algorithm to act as witnesses of the cross-chain bridge.
TEE can ensure that all code logic runs according to the specified restrictions. It is difficult for outsiders to break the code running in TEE, and there is no way to maliciously modify the data. Based on this, our MPC solution can continuously switch the cross-chain bridge key custodian, of course, rotating between hundreds of nodes in the Bool network.
But the nodes of the Bool network are actually public, so we also need to solve the privacy problem to prevent attackers from inferring who the key custodians of the cross-chain bridge are. We proposed RingVRF with privacy protection function. Simply put, you can prove that your public key is included in a set of N public keys (this set itself is hidden by cryptography), and then when you prove that you are a member of the set, you can do it through ZK. You can prove your identity without revealing your public key, and you only need to broadcast a temporary communication public key.
Then our overall logic is very clear: we hide the DHC (Dynamic Hidden Committee) node of the cross-chain bridge in the entire witness network, which may have hundreds or thousands of nodes. Then we use ZK+RingVRF to hide the identity (public key) of each witness node in DHC, so that the outside world does not know who the witnesses of the cross-chain bridge are; then because each node must run TEE, the private key sharding of MPC, the core program, and all the calculation processes are hidden in the TEE environment. No one knows what the specific calculation content includes. Finally, even the selected cross-chain bridge witness does not know that he has been selected. This can fundamentally prevent collusion or external attacks.
Baiyu: For CKB, we divide assets into two categories, one is Bitcoin itself, and the other is derivative assets issued on Bitcoin, such as BRC-20 or various runes. We have studied internally that if Bitcoin does not undergo a hard fork or soft fork, the most ideal bridge/second-layer solution for verification capability is BitVM, but it will take a long time for BitVM to land, so it can be considered that there is no cryptographically secure way to allow Bitcoin to safely move back and forth between the first and second layers in the short term.
In this case, we think that Bitcoin cross-chain bridges are prone to two extremes. One is extreme centralization, such as a licensed custodian like a financial institution. Big investors can rest assured that Bitcoin is stored in their custody because it is regulated by law. The representative of this type of solution is actually WBTC. There should be a market value of tens of billions of WBTC on Ethereum, right? It was created by the company BitGo.
Another extreme cross-chain bridge solution is to decentralize as much as possible. However, the difference between bridges is very large. Don’t think that they are all the same thing when you hear the word “bridge”. The difference between bridges can even be greater than the difference between bridges and non-bridges. You must clearly understand the degree of trust in the bridge. What can be achieved in the end is a model similar to POS, relying on economic security measures to approach cryptographic level security, that is, if the witness does evil, it can be punished.
But in fact, all the modes of Bitcoin cross-chain bridges have been basically used in various cross-chain bridges between BTC and ETH. People have already thought of many ways to get Bitcoin out and then go to the Ethereum chain. Various solutions have been thought of long ago, and we don’t need to think about other things. Among them, the more decentralized solution I see is TBTC, but TBTC may not be so easy to use and is not particularly widely used.
We at CKB are actually also in talks with Bool Network to see how to cooperate. We are also working on a solution similar to WBTC. Another one is similar to RGB++ or other UTXO-like asset protocols. This type of asset can be transferred trustlessly between CKB and other UTXO public chains through isomorphic binding.
As for whether homogeneous binding can be combined with DLC, or some progress on the BitVM side can allow it to be verified on BTC, finally we will use RGB++ to issue an RBTC, something similar to Wrapped BTC. We are considering this type of solution, and there seems to be some hope, but we cannot draw a conclusion now.
So everyone should still pay attention. The bridge is a honeypot with so much money locked in it, and there is also a risk. In addition to hacker attacks, is it possible that, like Multichain, the team suddenly encounters an irresistible external force and the money is gone?
Kevin: Let me briefly talk about the bridge issue. First, there is no absolute correlation between security and decentralization. For example, FireBlocks also escrows a lot of funds, but they haven't lost a lot of money so far. Instead, those decentralized bridges lose money every day. So, there is no absolute correlation between security and decentralization at present.
Second, we still need to find a bridge with more advanced technology. This requires us or the community to come up with something innovative to make a bridge trustless, because Trustless itself will generate benefits for the bridge's custodian, making it more secure. This is what we need to pursue.
Then let's look at the bridge model. Traditional bridges basically require users to hand over their funds to the bridge operator for safekeeping, and users completely lose their autonomy. The destination of funds is either controlled by multi-signatures, or controlled by POS, or controlled by fraud proofs, or by ZK verification to prove the validity of cross-chain messages. This type of model has a problem in itself, that is, users completely lose control of their assets, so is there a way for users to retain some control?
During the research, Bitlayer found that the DLC model may bring some new changes. Under the DLC model, when users and platforms lock assets, they use 2-2 multi-signatures and pre-signatures to predict future results. Users do not completely lose control. If it is an OP-DLC bridge, the worst case scenario is that the cross-chain bridge does not cooperate with you, but the assets will not be misappropriated. In the final analysis, we found that bridging solutions based on DLC or channels can bring some new changes in trust models or power distribution solutions.
Therefore, this aspect will be discussed in our technical white paper and the second-phase test network, and we hope to bring a new choice to the market or the community.
Let's talk about the key leakage issue. Several major theft incidents in the past were basically due to key leakage, either social engineering or other reasons. So let's see how to manage keys? The MPC solution can solve some problems. In addition, there are principles such as hot and cold separation and multi-signature role separation. These are actually industry standards of conduct, and we will provide them to our developer community in a way similar to the Security Codebook.
3. Jomosis: The next question is about the Lightning Network and the RGB protocol. In the past, these two projects were highly anticipated, but the ecological construction was far from satisfactory. What do you think about this?
Baiyu: One of our favorite Bitcoin routes is the Lightning Network. In the words of Cipher and Jan, the Lightning Network is the beacon of the Bitcoin world. We are very eager to promote things related to the Lightning Network, but the Lightning Network has been built in the Bitcoin ecosystem for five or six years, right? A large company like Lightning Labs is pushing it, but the progress has been very slow. I think this is the problem shown by the Bitcoin community, so more catfish teams like CKB are needed.
We saw that CKB proposed to build its own Lightning Network, and then RGB++ could be reused in the Lightning Network. After that, Lightning Labs also accelerated its development. We believe that the Lightning Network should become more open, rather than concentrating the right to speak in the hands of a few centralized companies, but become an open standard that can be compatible with any standard-compliant UTXO asset on the Bitcoin layer. However, Lighting Labs is now more focused on developing Taproot Assets, and the Lightning Network infrastructure will first be compatible with things like Taproot Assets, and it has not become completely open.
We hope that the Bitcoin ecosystem can continue to promote the openness of technical standards such as the Lightning Network. In our opinion, it is currently more ToB than directly ToC. A large number of users cannot stand the operating experience of the Lightning Network, and the latter sacrifices the convenience of UX for security. To be convenient, you have to give up some security. There are many service providers like financial institutions that survive in the Lightning Network ecosystem. We can see that such institutions have made some compromises in security, but their products are very convenient, such as LSD, and compliance issues are also considered in the design of the solution. These are the progress I have learned about the Lightning Network.
Then CKB's own lightning network will be on the testnet in mid-June, and then we will start some tests. We look forward to everyone testing some of our things. We hope that the lightning network plus RGB++, plus PassKey wallets like Joyid, can really make people use it on a large scale.
Regarding the second topic, RGB, I think when we discuss it, we should directly discuss the two things it contains. One is CSV, which is client-side verification, which is a very important expansion idea in the Bitcoin community. Unfortunately, CSV has been buried and not discussed much. More people still want to use Ethereum's idea to expand Bitcoin, but when expanding Bitcoin, they do not build another chain outside the Bitcoin chain, but build a P2P network outside the chain.
The core of the Bitcoin community is P2P, a point-to-point connection that allows us to directly verify important things with each other. CSV is basically based on this idea, that is, I build a P2P network outside the Bitcoin chain, so that everyone can spontaneously verify the validity of the transfer between two people. In order to achieve this, there is another core concept, which is one-time sealing, using UTXO on the Bitcoin chain as Single-Use Seal.
The above two points are the core points of the RGB protocol, and they can be used to write many articles. You can regard CSV as a service, and then you can make a DAPP-shaped CSV platform. CSV can be done in the form of a service. Of course, the core thing that CKB does based on RGB is to create RGB++. We regard CKB as an off-chain client of RGB, and security can be guaranteed through isomorphic binding.
In fact, there is another bold idea, which is that CSV based on Bitcoin may not be the best choice, because Bitcoin's verification ability is limited, but you can do CSV on CKB, including combining CKB with Nostra to do something. We may release a technical solution in the next few days, that is, how Nostra can be combined with CKB, and then encourage many project parties to do some social-related things.
In short, let me summarize it. The Bitcoin community has the idea of RGB and the idea of Lightning Network. These are excellent protocols in the Bitcoin community and should be carried forward. Combining these things can make things that I mentioned earlier that cannot be done on Ethereum. Ethereum wanted to do Lightning Network back then. If you are someone who entered the circle early, you should know that Ethereum has something called Raiden Network, but later it was stopped and completely abandoned. But this is something that Bitcoin can do, so why don’t we continue to move forward in this direction?
And as far as I know, there are also some projects on Ethereum that are doing CSV client verification, but these things actually come from the Bitcoin community, so we can carry it forward.
Kevin: Regarding the Lightning Network, if I remember correctly, it was originally intended for small payments, but there is a fundamental problem here, that is, it is better to use stablecoins than Bitcoin for small payments, and the lack of asset types supported by the Lightning Network itself is a problem. Protocols such as Ordinals, BRC-20, and Runes are recognized, and stablecoins are launched in combination with this new asset-to-asset protocol, and then payments or exchanges are made in the Lightning Network. Is there any new development in this matter? I am also very much looking forward to it.
We actually researched RGB before launching Bitlayer, but we did not adopt this technical route, thinking that this niche protocol still needs some market education. For us, we will consider the market more and consider things that are widely accepted, so we finally tried to do BitVM on Bitcoin, and with the current scale of the BitVM community, new technological breakthroughs are really possible, and it can be done without much soft and hard forks of the BTC main network, and our POC for BitVM has been run through.
Generally speaking, our idea is to let the entire Bitcoin ecosystem flourish and allow more concepts to be recognized by everyone. Bitlayer actually has the ability to support multiple VMs or multiple security models. After a breakthrough in verification capabilities, we can also support different programming models.
Kai: The Lightning Network is still limited by its non-Turing completeness. There is no smart contract and it is impossible to expand its applications well, because the Lightning Network was originally positioned only for small-amount fast payments. For CKB, it is a great improvement on the Lightning Network and can achieve Turing completeness.
Baiyu: I think both Kevin and Kai mentioned two very important points. In fact, today's Lightning Network is no longer used simply for small payments. No one uses Bitcoin for payment now. People still use it for asset storage, and retail investors don't have much Bitcoin in their hands. The real possible scenario is that I think the Lightning Network will become an infrastructure that will be compatible with various asset protocols issued on Bitcoin.
For example, if you use RGB++ to issue USDT, then this USDT can enter the Lightning Network, so the Lightning Network is more like a highway, you can allow other cars to enter as well. Originally, there was only one type of car in it, which was Bitcoin, but now other cars can also enter. This is its biggest change.
The second point that I think is more important is what Professor Kai said just now. Bitcoin's lightning network is still not Turing complete, but on CKB, the lightning network can add some conditions, at least to make the lightning network compatible with multiple asset protocols, and then you can complete the swap, and you can even do defi in the lightning network. There is a lot of room for imagination here.
4. Jomosis: If Bitcoin Layer 2 wants to reach the scale of Ethereum Layer 2, how many problems still need to be solved?
Kevin: The first is a cognitive issue. Everyone needs to recognize the characteristics of Bitcoin other than value storage. The second is a technical issue. We also need to solve the problem of on-chain verification, and the idea of client verification must be widely accepted by everyone.
Baiyu: I think people have actually lowered their expectations for the Bitcoin ecosystem. The Ethereum ecosystem has been developing for many years and has explored applications that are suitable for its technical architecture, but the Bitcoin ecosystem still needs a longer time to build a prosperous ecosystem. So we will stand on the shoulders of Ethereum and learn from it in terms of ecosystem construction. I think this is an important point.
Of course, we also need to explore some of the original Bitcoin things, such as what can UTXO do? For example, we are exploring whether UTXO is more suitable for NFT-related things, because it is originally parallelized and is owned by the user personally, not an asset owned by a smart contract.
Then, in the DeFi track, UTXO is calculated off the Bitcoin chain. After the calculation is done off the chain, the result is put on the chain for verification. The technical architecture of off-chain calculation and on-chain verification is more suitable for intent and OrderBook. The idea of making an Orderbook trading platform was first proposed by Ethereum, but their order book was not ideal. In the end, AMM automated market makers came out, but this may not be the case in the Bitcoin ecosystem. These all require a longer time to explore, and then they need to go to the market.
Kai: Bitcoin's second layer must ensure its trustlessness and security, and provide a set of standardized Layer2 solutions. At the same time, the Layer2 experience must be good. For example, many of the account systems supported by the second layer are still Ethereum's account systems, but you can also directly use Bitcoin's account system to open up scenarios on the second layer. Of course, these are just assumptions. I feel that in the end, there will definitely be better solutions to solve some of the existing problems.
5. Jomosis: In the current Bitcoin Layer 2 ecosystem, which projects do you admire the most in terms of technology or overall narrative?
Kevin: This question must be about Bitlayer, haha. I think Bitlayer has a relatively clear architecture and ideas for solving problems. We have identified the problems to be solved and found a good way to solve them. At the same time, we have also made some innovations to the existing solutions. For example, we can do FRI or verify STARK on the BTC chain based on Taproot without relying on the OP_CAT opcode (based on BitVM). This is actually our innovation.
The OP-DLC bridge mentioned earlier is also a better fund control model we have found, and we have spent a lot of thought and energy on the multi-VM design. In general, we hope to push the BitVM-related technical community forward. For example, we helped the BitVM Chinese community and Geek Web3 jointly launch BTCEden, a Bitcoin second-layer risk assessment website, and hope to provide some public goods to the community.
At the same time, we also helped the BitVM community build a community. The Chinese community of BitVM should now have tens of thousands of followers. We have done a lot of popular science and insisted on publishing BitVM weekly reports, which is equivalent to externalizing our internal research content into a product form. We hope to attract more people to the research and development process of BitVM, which is beneficial to all developers.
We are very happy to see that the BitVM family is growing rapidly. At least 6 or 7 projects are built around BitVM. We are also a core contributor to BitVM. Our researcher just won the challenge of SHA256 OPCode and received a prize. We also hope that more project parties will join us to explore and make breakthroughs in this regard, so that Bitcoin can achieve verification capabilities without too many soft and hard forks, which will benefit the entire Bitcoin ecosystem.
At the same time, I think the CKB team and Bool team here today are also very distinctive teams. They have their own persistence, their own characteristics, and good implementation, which is also worthy of respect.
Baiyu: What I appreciate most is of course the CSV route represented by RGB and RGB++, and the fast payment route such as the Lightning Network. A feature of these two routes is that they both expand capacity outside the chain, and then rely to a certain extent on the security of Bitcoin UTXO and the very limited capabilities of Bitcoin scripts. This is something very unique in the Bitcoin ecosystem.
We always want to change Bitcoin to be like Ethereum, such as the verification capability of smart contracts, and then we can do many, many things. Everyone will always explore how to do more things off-chain. Then I also hope that more teams can explore the road of innovation. We always envy the emergence of Uniswap, which can be written with 500 lines of code, but in fact, before Uniswap, there were other Defi protocols, and many more people made many attempts, and finally Uniswap came out.
I think the Bitcoin ecosystem is now on the eve of such a situation. There are a large number of innovative ideas, but they have not been fully realized or commercialized and brought to the market. In fact, many such opportunities can be found. This is my opinion.
Kai: I think the BitVM bridge is a very good solution. Of course, it will take a long time to implement it. During this period, we may need some alternative solutions, such as multi-signature or MPC solutions to solve some of the current problems of Bitcoin Layer 2. So our Bool Network can help Bitcoin ecosystem projects in the early stages and quickly build some applications from Bitcoin to Layer 2.
