How to Build Modular Bitcoin L2 With BTC Shared Security | Matt Ye - Lorenzo Protocol

[Music] yeah so um before we even started just a short intro about our team and also myself so we are loronzo protocol so actually we call ourselves as liquid staking modular Bitcoin L2 that's a long name because it comes with a lot of stuff one is liquid staking and one is modular deack of Bitcoin L2 we're going to get to both of them in the coming slides and also bit about myself a nice meeting you all so before that I studed computer science my whole life and after that most of the time I was working in the trading firms so that's also how I learned about cryptos and figure like how this thing can be like I actually like learned about Bitcoin as the first assets ever in my life so that really changed my mind about how I understand about finance and also how I understand about democracies like like just in finance as well so that's how we decided like we should actually bring Bitcoin one step further to make it really an asset for everyone and making it into a day-to-day Assets in our daily life so that's how we started and today's topic is about like how to build modular Bitcoin L2 with BTC share Securities so I'm not going to like a very deep dive into like all the technical details about how to do it but just like a very broad idea about how it is possible and what are some of the high level ideas on to really achieve this goal and why it is the best way to scale Bitcoin uh with modular L2 so we have been like seeing a lot of exciting things upcoming recently in the Bitcoin ecosystem we've been seeing oros we've been seeing like these BRC 20s we've been seeing tap rot assets and all these kinds of cool assets being created on the Bitcoin Network and a lot of them has actually achieved great success like those top oros in the BRC 20s has both like all achieved more than a hundred million US dollars of market cap so that's very great achievements but what we are actually looking at is not just having assets being created on bitcoin but it's actually a defi ecosystem which is like a functioning defi ecosystem built on top of Bitcoin and a Bitcoin standard ecosystem utilize these assets to provide Financial Services or more broader Services of any kind to everyone so if we're just thinking about ethereum as a benchmark so ethereum's current defi Market capab is about 80% of the ethereum market cap well if we want to do a benchmark for Bitcoin in the same kind as well so if you're thinking about the market cap of Bitcoin as of today the defi market cap for Bitcoin should be around 800 billion US dollar but where are we now so we are still like at very beginning it's not even the end of beginning it's actually the beginning of the beginning we're not even close to the 800 billion US dollar goal so in order to really achieve that we need a really functioning high performance and fully scalable L2 ecosystem on top of bitco coin so Bitcoin currently has like so many limitations on it one is like it has very slow iot storage so the current block time is still 10 minutes and for every 10 minutes even with the seg upgrade and a tap rout upgrade it's still like you can write less than 4 megabytes uh in every 10 minutes so that's like about 6.7 kilobytes per second it's super slow and besides about the price it's also very uh ter of the speed it's also very expensive to rise to it so with the oros like the peak of like writing to bitcoin is actually about 500 Satoshi per bite fee rate so that means if you want to write one block at this fee rate that would cost you five Bitcoins just for writing one block that's also like it's just like unaffordable to writing any data and also a lot of the L2 Solutions currently they have like very centralized the two things is like one is centralized trust is that you will have to trust some like thirdparty entities to provide the service to you or just probably some like single notes to run those whatever proofs they are providing there and also two so the centralized system availability is also a problem as well is that so if there's only like very limited numbers of no providing Services if they are down the entire service is down like all the business building on top of it is down as well that's also not something ideal and also uh we have execution constraints on top of that which everyone is very familiar about is that Bitcoin is on a utxo basis this is not very compatible with all of the modern execution environment and also smart contract uh kind of pattern of of execution environment as well and the last stuff is about asset compatibilities so asset compatibility is like a two-way thing so whatever data format it's in Json it's in script or it's in whatever format you have on bitcoin you have to make it compatible on L2 and whatever assets you created on L2 whether it's a smart contract or it's the other types of like data programmable data on L2 you'll be able to settle it on bitcoin l one as well so that you can have like the bridge connecting the two layers seamlessly so one proven successful way on ethereum is actually the modular modularity is to getting everything to be modular so on the very beginning so ethereum is like a monolithic blockchain which having all the functionalities it ex executes all of the smart contracts it does the settlement it stores data and also it talks to the other blockchain through interoperability layers as well it basically does everything but also we noticed like ethereum once had the same dilemma as what we have in Bitcoin today as well is that it's not fast enough and it's very expensive to store data onto it and it has like all these it does not support like different uh alternative language and alternative execution environment on top of that as well so that's when modular blockchain has become a huge thing for everyone so if we like take a look at today's ecosystem if we talk about data availability of course etherum is still the biggest one storing all of the data the finality of all the data onto it but also we have a lot of alternatives to it we got like igen da to store data we got cencia to store data we got ail near and a lot of other options for us to store data onto it and also if you talk about the settlement also like verifying the correctness of the information so we have a lot of rollup sdks out there for us to to select you like Arbitron ones optimism ones CK polygon and a number of others as well and we have shared sequencers like espresso and radius and also on top of that we have a lot of L2 as a service kind of platforms to combine all of these modules into one and provide service to everyone so what are the perks to that so one thing is obviously is the highly modularized for everything so if you learn about computer science the first principle for everything is single responsibility principle is that we want to keep everything simple just to do one thing and to do one thing correct and to do one thing right so this is like basically the ethos in a modular blockchain as well is that you do one thing and you do that thing really well and also with this modular setup it's very easy to do replication so a lot of the work we're doing is that so how to value a work's like it's worth is that how many times this can be replicated and how many different places the same work can be applied to so if you're going to build everything in modules so you can basically reuse this module in every L2 and in everything so it's just going to multiply the word of any single work you put into it and also for users it's like high customization so you can customize it for any purpose you want to buot it on it can be an AI chain gaming chain dii chain or whatever you want to put on top of it and also easy to innovate so if you want to do Innovation just do one fraction of the work and you reuse the rest of the technical Stacks you don't have to rebuild everything and essentially on the very beginning ethereum just just one chain and for today it's like everything like every decentralized ecosystem like providing services to ethereum can be considered as part of ethereum as well and that's how the scalability way for ethereum so does the same idea applies on bitcoin I think the answer is yes so for a lot of these new Bitcoin assets like oral BRC 20s like Tapo assets or RGB assets essentially they're just using Bitcoin as an da layer like the same way as all of this ethereum applications and ethereum assets has been using ethereum as a DA layer as well so for all of these missing components like the smart like the the smart contract execution environment like the consensus and settlement Solutions or like the Das we can just provide them as different modules and also we can provide alternative options for each modules and we can provide a stack to combine them into one and to customize with different selections in every module and also the next thing is so we can have different uh architectures Beauty on top of that but the next important thing is blockchain is all about decentralized assets and assets rights and property rights so how can we settle assets onto Bitcoin if we're building an architecture modular modular architecture so if we do a revise on what are programmable assets or even before that what is really a program so if we think about a program like in a memory or in the in in the stack how does it look like so basically it has this static data which are the metad datas on top of that and below that there are the programs like the the real instructions beneath that these are the executables and then we have all the state these are all these data like on top of the on top of the stacks and also some of the memories you allocated uh in the Heap for storing data that's kind of the state of execution uh of this executing of this program and also one thing special about uh uh just like decentralization is that you have to provide a validity proof you have to provide some proof that the execution and the state is actually correct so as long as we can have the four stuff we can actually kind of represent uh the state of any decentralized assets and also we can store the state of the assets on any storage that we have in our hand so the idea is that we can actually store a lot of the root hash or store a lot of these pointers uh on bitcoin while for the really large amount of the data for example if we are going to compiling an evm solidity contract so once it's compiled it becomes like an executable binary we just store this binary on the da layer and we have a hash from Bitcoin to point to that assemblies on the da layer and also on top of that we need to provide a lot of extra stuff depending on uh what's the what's the settlement architectures you have it could be some ZK proof to prove the correctness of execution it can be some uh like merized uh proof to to prove the current states and also correctness of execution of the of the smart contract as well so basically you have the uh assembly being stored on the da you have the current states to be stored on the da and also you have all these kinds of proof stored on the da to prove the correctness of these data so if you want to use this data for example in evm you just like load this pointers from Bitcoin and with all these hashes you'll load these supplemental data all these binary data all these proof from the D and you check the correctness of this data if everything just like aligns everything makes sense you just like load out of these data into evm you keep executing on it and to get the new state and then you settle onto Bitcoin onto the da as well so what's the big perk with all of these like modula setup and also all these different asset standards to be introduced into Bitcoin ecosystem so I would say like the only one reason that we have all these different like good blockchains we have today is because Bitcoin didn't do a perfect job in the first place it does not support a touring complete execution environment it's not fast enough it has all this and that problems so that we need all these different blockchains today to just kind of like to make the make the world better but it's time for us to bring all these great Technologies back into the Bitcoin ecosystem so for example if we want to just build an evm like evm as morphic blockchains on top of bitco coin we can basically just using Bitcoin as in da and we have another da to store all these like evm related data on top of it and we have POS on top of it and we have evm execution environment on top of it so that we can kind of build in blockchain architecture the same the same thing as ethereum or if we say just an example like okay I think like move language would be a very cool language it's like very secure execution environment why don't we like build a move execution on top of Bitcoin evm on bitcoin Bitcoin Network to secure the transactions of Bitcoin you can also do that so if you like put M VM on top of that and you have the aptus bftt as the consensus and you store the aptus assets uh for example standards on top of that and you can build like a an aptus as morphic Bitcoin L2 on top of it so one uh observation we have today is that once orinal has been introduced a lot of ecosystem a lot of like communities are trying to kind of create their own orals into the Bitcoin ecosystem to bring kind of bring the hype into their ecosystem as well so why don't we just take it like one step further so we don't just like bring the memes and we just don't bring the like hype into the Bitcoin but also we actually bring the technology and bring the people the user the application and the capitals into the Bitcoin just like using Bitcoins for everything onto this like for this good Technologies we have as of today so the next question would be yes we can build all these like modular setups and we can have like all these different stuff so why should we trust these like decentralized systems outside of Bitcoin and one more question is we have different modules like in this modular setup why these modules should be trusting each other at all so the answer to that is Bitcoin shared security it's actually this is a picture not created by me it's created by babon so they are the team actually invented BTC share security and we are just using them so the idea is that so BTC share security is like a Marketplace on one side there are the BTC holders they're happy to provide and share Securities to those POs or decentralized systems that need security and on the other side these are these decentralized systems they are happy to provide yields they are happy to provide rewards but just for like using the BDC share Securities to secure their Network so the BDC share security or the BDC staking protocol is basically a Marketplace to connecting both sides and providing rewards for BDC staking so a lot of things is that so people would have concerns like if I using BTC like why do I want to use BTC or if we're just like using it as a bootstrap like should I be quit using it at some point but there's like one thing works really well with BDC share security is BT modular BTC setup so think about this so if you're like building a decentralized system working on top of Bitcoin and it used to scale Bitcoin does it make sense if it's not secured by Bitcoin at all no it does doesn't make sense so everything should and like have to be secured by Bitcoin and the easiest way to do it is using BTC share security so with all these Bitcoins uh market caps on top of it and the holders just like stake to all these decentralized systems through the BDC share security networks and just use it in all of these different modules and if you want to make it even more secure different modules can even have like a safety threshold so you can say I can only want to work with this module as long as it has a tvl of a certain amount for example only if you have like a hundred millions US dollars worth of Bitcoins tvl like in on your stake otherwise I'm not going to work with you so that's kind of like everyone is on the same trust base so if you think about like different modules having different trust bases I mean they will have different Securities and different Securities means vulnerabilities but now that every module is secured by Bitcoin and everyone's security providers are all the same so there is actually no difference in like the security levels on top of that so everyone should be happily trusting each other and the only like the risk we have is what if Bitcoin market cap actually go down to zero but this will never happen so we won't have any concern using this Primitives on top of these modular setups and also to bootstrap the Bitcoin l2s we actually have some more architectures on top of that to help uh these Bitcoin L l2s to be successful so we are providing this loronzo liquid staking on top on top of BTC share secur Securities it provides several stuff one is that liquid staking is after you stake you will still have the liquid staking tokens of the same shares so that you'll still keep liquidities and also two we'll accept small amounts of BDC staking so no matter how small amount of BDC you are staking to those decentralized systems you will still be uh eligible to collect rewards from staking and also we provide some security guarantees so that uh uh you will not like be slashed very easily so on the other side we're going to launch this loronzo L2 as a service to combine all of these modules into functioning and customized l2s so the idea is that so with more tvls being going through us we're going to be allocating more TV tvl to these uh Bitcoin L2 modules to help them like being successful this is like the bootstrapping stage and when these l2s become more successful they'll bring in more users and more capitals and more tractions so we can have more tvl to to secure all of these networks so this is like how this flywheel is all about so so for this call it's uh for this like presentation it's not really kind of just a Showcase of how much we have been done it's actually like a call for actions on like having more Builders to be joining us so the question would be like why should we build now right so one good saying is that during a gold rush just sell shos is that so just building the tools building some some tools can be reused for everyone is the most like the best thing to do at this stage because we all know bitcoin's defi ecosystem is going to be very huge to be very successful and we just need some tools to make it happen so thinking about how op Stacks has been used by so many chains has been empowered so many platforms we're doing exactly the same thing today and even bigger so just like a Bitcoin ecosystem is like at least three times bigger than ethereum market cap is of today and the defi market and the market wor should be at least three times bigger as of today ethereum as well so just like build anything like VM sequencer op stack ZK stack da interoperability def infra anything can be useful in this ecosystem so if you want to join us to talk more about like how to build this modular setup and how to like build a bcoin Futures together so our website is loronzo protocol. XYZ and here is uh the QR code to our link tree feel free to scan and follow our social media or to chat with us like on online happy to do that and also we have a booth 206 on the main Vue as well so also feel free to draw by and like have a conversation with us so we have a lot of swags and also a lot of like just like just chill with us so and also we are hiring so if you're interested in joining us please email career lorono protocol. XYZ so we're happy to have more collaborators on our way to building the future of Bitcoins together that's it thanks [Applause] everyone