BitSync: Novel Decentralized Layer 2 Sidechain Architecture for Leveraging BitVM

[bitsync]

Fellow Bitcoin enthusiasts and developers,

I'm excited to present a comprehensive theoretical study and prototype pre-implementation of BitSync, an innovative Layer 2 sidechain architecture designed to extend Bitcoin's capabilities while maintaining its core security model. BitSync addresses the longstanding challenges of scalability and programmability in Bitcoin without compromising decentralization, requiring hard forks, or introducing new trust assumptions.

Brief Technical Overview:
Real-Time Synchronization with Bitcoin:
BitSync achieves tight coupling with Bitcoin through a bidirectional referencing mechanism. Each BitSync block SC_j includes a field H_B_i representing the hash of the latest Bitcoin block B_i. Conversely, Bitcoin miners include a commitment to the latest BitSync block hash H_SC_j in their coinbase transactions. This mutual commitment ensures both chains are aware of each other's state at block creation time, effectively preventing manipulation through private forks.

Auxiliary Proof-of-Work (AuxPOW) Integration:
BitSync proposes a modified AuxPOW protocol that allows Bitcoin miners to simultaneously secure both chains. Key components include:
a) Chain ID (c): A unique identifier for BitSync, ensuring distinguishable commitments.
b) Chain Merkle Tree: Included in Bitcoin's coinbase transaction scriptSig, containing commitments to auxiliary chain block hashes.
c) getExpectedIndex Function: Determines the expected index i in the chain Merkle tree for a given chain ID c, nonce n, and tree height h.

AuxPOW Validation Process

Verify Bitcoin block header B_i meets PoW requirements and is part of the canonical chain.
Validate coinbase transaction contains AuxPOW Tag and Merkle root of auxiliary block headers.
Verify Merkle branches linking coinbase transaction to Bitcoin block's Merkle root and H_SC_j to the Merkle root in coinbase scriptSig.
Ensure Bitcoin block's PoW meets BitSync's difficulty requirements.
Confirm BitSync block header includes H_B_i correctly.

BitVM Integration for Trust-Minimized Withdrawals:
BitSync leverages BitVM to enable arbitrary computation verification on Bitcoin without consensus changes. The withdrawal process involves:
a) User initiates a burn transaction tx_burn on BitSync.
b) A zero-knowledge proof (ZKP) is generated, demonstrating:

• tx_burn is included in SC_j
  
• SC_j includes H_B_i
  
• PoW_S(SC_j) is valid
  
• B_i+1 includes a commitment to H_SC_j in its coinbase
  

c) The ZKP and referenced Bitcoin block hash are submitted in a special transaction tx_withdraw to the Bitcoin network.
d) Verification uses OP_BLOCKHASH to ensure the referenced block is in the canonical chain.

Handling Reorganizations:
BitSync's 1:1 relationship with Bitcoin blocks ensures that any Bitcoin reorg directly impacts BitSync. The sidechain rolls back to the last valid Bitcoin block that was merge-mined with BitSync, maintaining synchronization with Bitcoin's canonical chain.

Data Availability and Network Integrity:
BitSync proposes a hash-based data availability mechanism that ensures all necessary transaction verification data is accessible without relying on proof-of-stake style slashing mechanisms. This aligns with Bitcoin's PoW context and avoids introducing additional trust assumptions.

Decentralized Sequencing and MEV Protection:
BitSync incorporates special nodes that act as decentralized sequencers for potential rollup implementations. This setup mitigates risks associated with Maximal Extractable Value (MEV) by distributing sequencing responsibilities through auction mechanisms and race conditions for solving and collecting revenue.

Addressing Shortcomings of Existing Layer 2 Solutions:
Current Bitcoin Layer 2 solutions often compromise on decentralization or introduce new security assumptions. For instance:

• Lightning Network: While offering fast transactions, it faces liquidity issues and routing centralization, not providing any extended computation capacity such as smart contracts.
  
• Liquid: A federated sidechain relying on a small group of functionaries, introducing trust assumptions.
  
• RSK: More decentralized, but still introduces new security assumptions not directly tied to Bitcoin's PoW.
  
• BitLayer: Leverages BitVM for Bitcoin-verifiable compute, but has no plans nor proposed actions towards decentralized sequencing and Bitcoin-based finality.
  

BitSync aims to overcome these limitations by providing a solution that's as decentralized as Bitcoin itself, with security directly derived from Bitcoin's PoW without introducing additional trust assumptions. I believe that combining BitVM (a relatively new technology) and AuxPOW (battle-hardened and well-established through multiple altcoins already) brings considerable architectural benefits to future sidechain implementations, addressing many of the issues currently present in the space.

Theoretical Considerations and Future Work:
While BitSync presents a promising approach, it's important to note that this is a theoretical study and work in progress. Several areas require further research and development:

• OP_BLOCKHASH Implementation: The current design assumes the existence of an OP_BLOCKHASH opcode, which is not currently available in Bitcoin. I'm exploring alternative approaches using existing opcodes or potential soft fork proposals.
  
• Zero-Knowledge Proof Systems: Optimizing the ZKP generation and verification process for efficiency and minimizing on-chain footprint.
  
• Scalability of the Data Availability Solution: Further analysis of the hash-based data availability mechanism's scalability in high-throughput scenarios.
  
• Economic Incentives: Refining the incentive structure for special nodes and miners to ensure long-term sustainability of the network.
  

I invite the Bitcoin developer community to scrutinize this design, attempt to break it, and suggest improvements. Key areas where feedbacks are particularly welcomed include:

• Security analysis of the two-way peg mechanism
  
• Potential attack vectors in the decentralized sequencing process
  
• Optimizations for the BitVM verification process
  
• Scalability and performance implications of the tight coupling with Bitcoin
  

The full technical specification, some mathematical modeling as well as pseudocodes are available at BitSync's whitepaper https://ipfs.io/ipfs/QmfNYZqjQ9bJ5gAwNfA31PyaD6YeZKGMtheEmxqUoPBaRW. You can also check BitSync's website at https://bitsync.dev or message me directly at [email protected].

Looking forward to your technical insights, critiques, and contributions to this ongoing research,

Kobe Koike

[d5000]

Interesting. Looks a bit similar to Paul Sztorc's Drivechain and other early sidechain ideas, but using some newer technologies to make it possible. Basically it looks like an implementation of the Bridge protocol mentioned in the BitVM2 whitepaper, specifically using the AuxPOW (merged mining) method for the sidechain consensus.

But I assume that due to its usage of BitVM, it would not need to introduce new opcodes (correct me if I'm wrong), e.g. for covenants (or Drivechain's OP_ACK), and instead rely on principles similar to optimistic rollups.

Thus I don't understand why OP_BLOCKHASH would be needed as an additional opcode. Can't you "simulate" it via a "BitVM program"? My understanding is that you can create arbitrary programs with Bitcoin Script using BitVM2, but my understanding is not very deep. On page 20 of the BitVM2 Bridge whitepaper (the one linked above) there is a proposal how to emulate OP_BLOCKHASH.

I'm not an IT expert but have analyzed some L2 designs from a semi-layman perspective here and this would definitely fit in this thread, so I may try to write a ELI5 on it. Would love to see this implemented ...

PS: An older design (from March, thus probably still with BitVM1) had already a thread here: https://asktom.cf/index.php?topic=5489872.0