Bitcoin Ecosystem Holds Enormous Potential

Bitcoin, as the cornerstone of the entire cryptocurrency industry, currently boasts a market value of $874.8 billion. However, most of the time, it is merely considered a value storage medium, often referred to as “digital gold.”

Wrapped Bitcoin (WBTC), as one of the rare pathways for Bitcoin to enter the DeFi space, is an ERC-20 asset pegged 1:1 by the centralized custodian BitGo. With a current market value of $7 billion, it is less than 1% of Bitcoin’s market value.

Therefore, the Bitcoin network actually has a significant amount of untapped liquidity, and the native Bitcoin ecosystem holds immense untapped potential momentum.

In our common understanding, the Bitcoin network does not support smart contracts. Script, the programming language supporting smart contracts, is not Turing complete like Solidity commonly used on the Ethereum Virtual Machine (EVM). However, for security and simplicity considerations, Script supports functionalities such as multisignature, timelocks, and Partially Signed Bitcoin Transactions (PSBT).

The Segregated Witness (SegWit) upgrade provides a separate segregated space for witness data (signature information unlocking UTXO transactions) with a capacity of up to 4MB, expanding the types of media stored on-chain.

The Taproot upgrade enhances transaction privacy and allows Bitcoin to execute more complex transactions. It can store data in the spending script path of Taproot scripts. These advancements have paved the way for the Ordinals protocol, giving birth to the distribution of new types of assets and the prosperity of Bitcoin-based assets like BRC20, bringing people’s attention back to the possibilities of the Bitcoin ecosystem.

On-Chain Ecosystem Nurturing the Bitcoin Network

Many Bitcoin OGs insist that Bitcoin should remain simple and pure, playing the role of a value reserve. However, the lack of on-chain activity can pose a threat to Bitcoin.

Taking the upcoming Bitcoin halving as an example, the reward per block of 6.25 BTC will be halved, significantly reducing miners’ income. If the expenses outweigh the income, it naturally leads to a reduction in the number of miners, decreasing decentralization and increasing vulnerability to attacks.

There are only two solutions to avoid this scenario: an increase in Bitcoin’s price (even if it doubles, the block reward income will remain balanced); or increased on-chain activity bringing in more transaction fees. This has been verified by the Ordinals protocol and BRC20.

(Source：https://dune.com/cryptokoryo/brc20)

The two waves of high activity of BRC20 in May and December significantly boosted BTC miner income. So far, the Ordinals protocol has brought in 5979.4 BTC (~$257.7 million) in income for BTC miners, surpassing the miners’ coinbase revenue by a considerable margin.

(Source: https://dune.com/dgtl_assets/bitcoin-ordinals-analysis)

A commonly used metric by Bitcoin developers to gauge network security is assessing the number of full nodes. To enable personal PCs to run full nodes, there is a strict limit on block size and UTXO set size to reduce the cost of full nodes.

Judging from the number of BTC full nodes, the emergence of inscriptions has led to increased interactions with Bitcoin RPC, which increases the number of Bitcoin full nodes.

(Source：https://bitnodes.io/dashboard/8y/)

It’s evident that the BTC network needs empowerment by the ecosystem. Rich on-chain activities not only bring economic benefits to miners, compensating for losses after halving, but also increase the number of full nodes, enhancing network security. More importantly, it allows more people to truly understand and use BTC.

The Mechanism Unleashing BTC Potential in the B² Network

Apart from the limitations of smart contract languages, BTC itself is slow and expensive, contributing to its lack of applications.

In Ethereum, the key means of Layer 2 scaling essentially involves modularizing the blockchain, separating the execution layer to improve efficiency while inheriting the security of the Ethereum network.

The past year has seen a surge in Ethereum Layer 2, with over 20 Ethereum Layer 2 chains being implemented, firmly establishing the concept of Layer 2.

To unlock Bitcoin’s potential, a natural approach is to build a Layer 2 network for scalability, using an efficient and fast virtual machine, such as the well-known EVM, as the execution layer to compensate for some of BTC’s shortcomings.

B² Network is a pioneer in BTC Layer 2 networks. It is a ZK Rollup based on Bitcoin zero-knowledge proof verification commitments and is EVM-compatible, bringing Ethereum’s capabilities to the Bitcoin ecosystem.

(Source：B² Network LitePaper)

Technical Architecture

The technical architecture of the B² Network mainly consists of two layers: the Rollup layer and the Data Availability (DA) layer. To simplify this architecture, there is a need for a virtual machine to process user transactions and a place to store and verify these transactions.

(Source：B² Network LitePaper)

In the Rollup layer, B² adopts the zkEVM solution, extending the Polygon CDK to BTC in collaboration with Polygon Labs.

Through account abstraction, users can interact with both Ethereum and BTC accounts. Popular wallets such as Uniswap and Metamask can be seamlessly used, catering to users accustomed to both ecosystems and reducing the learning curve.

The main account can leverage the Transaction Bundler service to facilitate gas payment for sub-accounts.

(Source：B² Network LitePaper)

User transactions are submitted and processed at the Rollup layer, with user states also stored in the Rollup layer. The network generates relevant zero-knowledge proofs, which are then packaged and sent to the DA layer for storage and verification.

The DA layer comprises decentralized storage, B² nodes, and the Bitcoin network, used for validating the zero-knowledge proofs of Rollup, permanently storing copies of Rollup layer data, and ultimately inscribing the data onto the Bitcoin network as inscriptions.

The entire data flow is illustrated in the following diagram. After the B² sequencer packages user transaction data, it is stored through distributed storage to avoid single points of failure and enhance reliability.

To ensure data availability, B² writes Tapscript scripts to the Bitcoin network in each block, ensuring continuity in data availability over time.

(Source：B² Network LitePaper)

In the Ethereum network, Rollup involves transferring data from Layer 2 networks to the mainnet’s contract through calldata for transaction verification and data storage. However, the Bitcoin network does not support automatic verification of smart contracts. ZK-Rollup on Bitcoin utilizes Taproot to write zero-knowledge proofs and aggregated Rollup data into the Bitcoin network, ensuring the pegging of ZK-Rollup data in Bitcoin and preventing tampering.

However, it does not guarantee the validity and correctness of transactions within ZK-Rollup or utilize Bitcoin’s robust consensus to ensure the security of Layer 2 ZK-Rollup.

Therefore, the approach adopted by B² is to write the commitment of zero-knowledge proofs to the mainnet, allowing challengers to initiate challenges to the commitment of zero-knowledge proofs within a specified period.

If someone successfully challenges, the Rollup will be rolled back, and the challenger will take away the assets locked by the nodes. If there are no challenges during the challenge period or if the challenges fail, the Rollup will be confirmed on BTC.

(Source：B² Network LitePaper)

Ingenious Design Aspects of B² Network:

1. Account Abstraction for User Accessibility: B² employs account abstraction to reduce the learning curve for users. This essentially lowers the barrier for asset access, allowing users to connect their wallets to the side where they have assets.

2. EVM Compatibility in Layer 2 Network: The Layer 2 network of B² is compatible with the Ethereum Virtual Machine (EVM), facilitating the migration of developers and projects from the Ethereum ecosystem.

3. Hybrid ZK+OP Mechanism: B² adopts a hybrid mechanism similar to ZK+OP. It utilizes zero-knowledge proofs (zk) for data verification, reducing transaction costs. Simultaneously, it employs an optimistic rollup (OP) challenge model to overcome the limitations of Bitcoin’s verification capabilities.

B² Network envisions more than just being a BTC Layer 2; it aspires to become a central hub in the BTC Layer 2 space, similar to Cosmos Hub or Op Stack.

In the future, as B² Nodes evolve into B² Hub, it will serve developers and projects aiming to build Layer 2 Rollups on the Bitcoin network. The B² Hub will provide a data availability layer, state transition verification, and a proof system based on the Bitcoin network.

Developers will be able to choose the combination of Polygon CDK and B² Hub to build their own BTC Rollup.

B² Tokenomics

In the design of B² Network, there are several decentralized aspects that demand token incentives:

Sequencer Staking

The B² network implements a decentralized sequencer service through B² nodes. Sequencers participate in validator elections by staking tokens. Similar to a Delegated Proof-of-Stake (DPoS) mechanism, the sequencer set is updated, and sequencers in the set provide transaction sequencing and packaging services in order.

B² Hub Revenue

When Rollup settles BTC via B² Hub, users are required to pay B² tokens to the B² Hub. This serves as revenue for the Hub, with a portion being burned.

ZK Proofs

Bitcoin miners can dedicate their computational power to zero-knowledge proofs, earning additional income after the Bitcoin halving.

Storage Nodes

Distributed storage nodes in the DA layer store Rollup data copies and zero-knowledge proofs. Running storage nodes also earns token incentives.

Governance

Token holders can vote on protocol proposals.

Staking

Users who stake tokens can share part of the platform’s gas fees.

How to participate

B² Buzz

(Source：https://buzz.bsquared.network/)

B² Buzz is a user incentive campaign launched by the B² Network. Users can deposit assets from early February until three days before the mainnet goes live to receive parts for assembling mining rigs. These rigs can be used to mine the native B² token. During the campaign, all funds are securely managed through a multi-signature method, and bridged assets can be withdrawn to the initial network deposited in April 2024.

Supported assets for deposit include:

• BTC: BTC on the Bitcoin network, wBTC on Ethereum, BTCB on BNB Chain
• BRC20 Assets: ORDI, SATS
• ETH: ETH on Ethereum
• Stablecoins: USDC and USDT on Ethereum, FDUSD on BNB Chain
• Matic: MATIC on Polygon

More deposit rewards and higher-level treasure chests can be unlocked through group participation. By using the Biteye referral link https://buzz.bsquared.network/?code=kUClH, additional benefits are available, including:

• 50% referral points sharing
• MiniBridge 20% off monthly pass
• CryptoHunt monthly card for deposits over 500 USDT (currently valued at 0.1e)

B² Network Odyssey

Users can follow and participate in Odyssey activities on the B² website. Assets deposited before the mainnet launch will be bridged to the B² mainnet and circulate within the ecosystem. Users can interact with ecosystem dapps using these bridged assets, earn more points by completing tasks, and potentially receive future airdrops.

(Source：https://buzz.bsquared.network/)

Development

B² has launched a $1 million Grant program to encourage developers to build on this emerging BTC Layer 2. In the first round, six projects have already received grant sponsorships, including:

GlowSwap

A native DEX service for BTC-related assets on B².

Protocol X

A protocol based on Ordinals, aiming to help more DApps and gaming applications establish their asset systems in the BTC ecosystem.

L2scan

L2scan is a block explorer focused on L2 Rollup.

PawX

An NFT project allowing users to plant, breed, trade, and chat with other cat enthusiasts in the PawX virtual universe.

Mystic Mind

An AI-driven NFT astrology application.

Golden Fleet

A full-chain game using zk algorithms.

Conclusion

B² Network, by introducing EVM-compatible BTC Layer 2, significantly expands the scalability of the BTC ecosystem.

The use of zk-rollup dramatically reduces transaction fees, and with clever architectural design, combined with methods resembling fraud proofs, allows zk commitments to be challenged by users. This addresses the limitations of BTC Layer 1 in contract verification.

B²’s partners are top-tier projects. For example, it adopts the Particle Network solution for account abstraction and collaborates with Raas’ AltLayer. Currently, they are working with Polygon Labs to build the first Polygon CDK use case for BTC.

Strong partnerships position B² as one of the most viable Bitcoin Layer 2 solutions, worthy of attention and early participation.

Disclaimer：

1. This article is reprinted from [Biteye Community], All copyrights belong to the original author [core contributor to Biteye, LouisWang]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.