Differences between East and West in BTC Ecosystem Development Strategies

Author: DaPangDun, independent researcher Source: X, @DaPangDunCrypto 

I have been thinking about a few issues recently, and would like to share my views and discuss with you

1. Problems to be solved by Bitcoin L2

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I personally think it includes three aspects:

1) According to the definition of ETH L2, BTC L2 needs to solve the two problems of [improving transaction speed] and [reducing transaction fees].

2) According to the characteristics of the limited script capabilities of the BTC mainnet, the problem to be solved is [improving scalability].

3) According to the huge difference in the attitudes of BTC holders and ETH holders towards assets, the problem to be solved is the problem of [activating BTC assets].

2. Several ways to lock BTC

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There are four main ways:

1) Multi-signature bridge: the most common and easiest to implement, and many optimized solutions have been derived from this. Most BTC ecological projects have multi-signature bridges. The problem is that users are always required to transfer asset ownership, and the security of multi-signature accounts is subject to the "moral level" of multi-signers.

2) Time lock: Using BTC's existing operation code, it can be used to pledge BTC to generate pledge certificates, which can be used in some specific scenarios to generate interest. For example, Babylon (with the addition of slash mechanism) and Chakra (with the addition of STARK technology) are being done. The problem is that the staked BTC itself cannot participate in DEFI and other scenarios. Only the interest or points obtained from the stake can participate in it in the form of LST/LRT.

3) Script expansion: Promote the addition of more opcodes so that the main network has more script capabilities, thereby realizing other locking methods. Common ones include OP-CAT (most likely not passed) and Liquid's Simplicity language (under development). The problem is how to convince the core team and miners to adopt and support the upgrade.

4) Isomorphic binding: For some layer-1 assets, you can jump back and forth between L1 and L2 in the form of isomorphic binding to achieve native mapping of assets. In principle, it does not belong to the concept of "locking", but it also realizes the cross-chain effect that locking requires, so it is also placed here. The problem is that there is no plan to enable BTC to achieve isomorphic binding for the time being, and further upgrades are needed to explore the possibility.

3. Differences in the development of BTC ecology between the East and the West

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I personally think there are three main points:

1) The East focuses more on product thinking, while the West focuses more on infrastructure thinking: Most of the L2 in the East belongs to the category of product application, seizing the first-mover advantage and funds in the circle, and applying it at the fastest speed. There are many specific products, and I believe there is no need to introduce them. The West focuses more on infrastructure, for example, Babylon can be used as a modular DA, and then it is a natural process to combine products.

2) The West has higher requirements for nativeness than the East: For example, the West has always advocated "Lightning Network" and "RGB", and there are also narrative solutions based on the AVM of the main network, but I think this distinction is slowly decreasing. For example, stroom is a multi-signature bridge method used to stake on LN to earn interest, and Babylon is combined with the POS chain, etc. They pursue partial nativeness; the East also has solutions similar to RGB++ that extremely pursue nativeness (UTXO+POW).

3) The size of funds in the East is lower than that in the West. It seems that this has nothing to do with development ideas, but funds are the premise of development, so it is placed here. Also because of the problem of funds, Western project parties may be able to use a longer-term perspective to do projects, and the size will also affect the exposure and valuation of the project.