Hybrid L2 - TOKEN2049 Singapore 2024

all right hey everyone I'm Alexi I'm the co-founder of Bob and today I'm going to talk to you about the hybrid L2 so you know fancy buzzword so what the hell is that um and it actually all goes back to bitcoin um me personally have spent the last 10 years working on bitcoin and figuring out ways to do more with it without trusting intermares and the hybrid L2 is an approach where we believe we can finally get Defi and Innovation back into the Bitcoin ecosystem so why don't we care about Bitcoin Bitcoin is bigger than everything else by far and it will remain so for the fa future and it has been since the start but or and it has at least amount of defi if you look at ethereum's market cap and you compare it to the tvl that is deployed in defi on Main at n l2s it's a 30% ratio now if you look at Bitcoin we're at 0.1% at a much greater market cap and that's why we think and many others you've probably seen the whole hyper on bitcoin l2s that this is one of the biggest opportunities in crypto for the last decade but why do the state have no s has no single bitcoin2 really been able to take the market you know gain traction and the reason is that the technology wasn't ready it was hard to use and what has been happening is that there's been a massive gap between adoption of Bitcoin and Bitcoin has been Spearhead Mass adoption by far an innovation of ethereum and what has been happening is that users talent and capital would get into Bitcoin and just flow through into the ethereum ecosystem leaving Bitcoin behind happened to a lot of my colleagues happened to us people start with Bitcoin and then they leave and the reason why it is so difficult to build a Bitcoin layer to is that you need to solve three big challenges first one being the obvious one Bitcoin security and Bitcoin Bridges and we actually now finally have a solution for this and I'll talk about this in a second the key word here is bit VM but there's two other things it's about ecosystem and liquidity you can build a good Bitcoin bridge but if you live in isolation there is no way to bridge stable coins and other assets to your network if you don't have the infrastructure you don't have the tooling nobody is going to use your chain you will not you will struggle with adoption you will never get to the point of actually Building Products that has happened to bitcoin for the last decade and this is why we propose a radically different approach we propos to take the best of ethereum and the best of Bitcoin and to combine them into a single Network and the vision for hybrid layer 2 is to Leverage The Innovation that you get from ethereum and the security and liquidity that you get in Bitcoin and from a Project's perspective you just like just like for B but also any dabs deploying you'll use ethereum to bootstrap if there's a powerful def ecosystem there's a massive Network effect there's liquidity there's tooling there's infrastructure and then once you have launched then you leverage Bitcoin to grow bitcoin's massive liquidity the diverse Global community that has been prepared to really build on bitcoin but has had no tools to do so because Frankly Speaking the lightning network doesn't work it's terrible ux it will not get adopted any further so how does it work well this becomes possible with the Advent of so-called bit VM and in short what this allows us to do it allows us to do arbit like layer 2's optimistic fra proof based systems on bitcoin and if we have time I'll run you through the tech in 1 minute at the end but the idea is you get Bitcoin security you get a native bridge to bitcoin that is secured by Bitcoin itself just like any ether olab has a native bridge to ethereum but then you keep and you maintain the relationship with ethereum as well and you make sure they have a native bridge between in our case Bob and eth that is secured by big and this is going to get slightly technical the way we do this is by making sure that ethereum instead of you know looking for FR Pro that happen on ethereum the smart contract looks at Bitcoin and because that's very easy to do this has been built already in 2016 ethereum can check what's going on on bitcoin cryptographically it's very easy to do and what you get is that the ethereum smart contract the bridge just looks at Bitcoin and checks oh is everything all right with Bob has Bob finalized on bitcoin and if s then an eth user can always get their ethereum or ec20 assets back and what this gives us it gives us for the Bitcoin user you can deposit your BDC you can always get it out as long as Bitcoin is secure and for the ethereum user you deposit your eanc 20s and you can always get it out as long as Bitcoin is secure and if there's one thing we can probably all agree here at this event is that Bitcoin is secure if Bitcoin breaks we're all going home anyway and the interesting thing about this design it's not just about Bitcoin ethereum sure this is 95% of the market that's what we're focusing on right now but this works for any other smart contract chain salana Chon Tron Avalanche poot anything that c smart contracts can easily verify Bitcoin there's these this Bitcoin like clients they have been built on all of these chains and what this ensures is that if you're an eth user Salan user Tron user you'll be able to deposit your assets into Bob trade them against Bitcoin usdt usdc but also e Tron Sal all the other assets and then withdraw each of these assets back to the layer one as long as Bitcoin is secure and if you look at this image you'll see parallels to exchanges exchanges work similarly they take your assets allow you to trade and they can withdraw back to whatever layer one you want to go to but you trust the exchange and in this case you don't trust us you don't trust an exchange you only trust that Bitcoin works and that is why we believe with this design design we can achieve the real flippening namely instead of Bitcoin being wrapped across different networks and being fragmented and controlled by centralized players you'll have a native way to trade Bitcoin against any other asset under Bitcoin security Now what makes this possible is something called bit VM bit VM is the single most important innovation on Bitcoin in the last decade and what bit allows you to do is it allows you to create fraud proofs on Bitcoin now the name is slightly misleading it's not a virtual machine it's not a new programming language it's not smart contracts on bitcoin bit VM allows us to run any program and ensure that it's enforced by bit control nodes so think arbit from think any e layer 2 that does optimistic FR proof rollups that's what bit VM gives us for Bitcoin you take any evm Solana VM doesn't matter you take an emm whatever you like you plug this into bit VM and then if something goes wrong you can challenge on bitcoin and we've recently released together with Robin who is the inventor of BVM and the credit goes to him for really creating this Innovation the new BVM 2 and BVM Bridge paper that really makes this practical so it's very easy to ensure security of the execution and we get a new type of bridge a bridge where you no longer need a multi or an honest majority but a bridge that works as long as there's one honest node somewhere in the network just like an arbitrum or in the future an optimism on ethereum as long as somebody does a challenge your assets can never be stolen and that is a zero to1 Innovation and something that we finally after a decade of research will see coming to bitcoin next year so but it's not only about tech it's also about combining the ecosystems and things that live on bitcoin and on ethereum and one of these things is staking and apart from bitam and bridging staking is also coming to bitcoin and with projects like Babylon and others you will be able to use Bitcoin the asset to secure networks and what Bob has been doing is enabling users to stake their Bitcoin across all of these providers with just one click and if you look at ethereum lsts lrts that's a multi-billion dollar market and I remember the first image on the slides right when we compare Bitcoin to ethereum in Market size staking on bitcoin is going to be a multi-billion dollar industry by the end of next year and what Bob allows you to do is to stake your Bitcoin with one click into dozens of different providers and strategies without having to deal with 10 different Bridges or having to spend hours and hours clicking through different front ends and the way it works is that we build this oneclick staking aggregator it uses and now the buzzwords it uses Bitcoin intense and cross chain verification right and what we do is we work with some of the leading LST providers like s Bedrock pel chakra pum BTC acre yii that all build on Babylon or other providers of Bitcoin security and then you can with one click deploy your Bitcoin into these lsds and use them in Bob's growing defi ecosystem inexes and lending to borrow against them to m a Bitcoin back stable coin while actually putting a Bitcoin to work and why this is exciting is for all these LST projects it makes the onboarding experience for users much simp instead of having to do wrapping or having to First Bridge the Bitcoin in because they all work slightly different for the user it's one interface one click and you're good to go and we've all been used to staking ethereum do Cosmos salana with one click now you get this for Bitcoin and then what we do is we work with wallets institutional custody providers taking aggregators and of course we have our own portal to distribute this to the millions of Bitcoin holders that want to do something more with a Bitcoin and we're happy to announce that we launched this this week and we're gradually releasing more and more Integrations and we have a big ecosystem that is already live on Bob including a dozen of Top tier LSD providers a growing defa ecosystem backed by some of the best infrastructure in this space including Cobo wbtc fbtc Dynamic tbtc and we revealed our first front-end partner that gets this into the hands of millions of users namely staking rewards St and there'll be much more to follow over the next couple of weeks so with that check out Bob we have over 100 projects already live building on the intersection of ethereum and Bitcoin and now I can see that I have three more minutes left so I'm going to do something I'm going to annoy you all with a technical Deep dive on how bit VM works and this is hopefully the simplest explanation of this New Concept this new hype buzzer that you're going to hear um and hopefully it helps now bit VM allows us to run any program on bitcoin and there's one thing that I also have to clarify many of us have thought that no Bitcoin does not have Smart contracts because it's so limited in the scripting language but that's not actually true you can write any program in Bitcoin script but the problem is because Bitcoin script is so limited in the operation that it has something that's five lines of code and solidity could be a thousand lines of code and script and then the size of that program just does not fit into a block andless we have showcase here right you have this massive large program maybe a bridge program that you could never run into a single like fit into a Bitcoin transaction so the first thing we do is we compress it using snarks we take this we pack it into a gross 16 Pro proven verifier system which gives us a snark verifier for that program now that is 2 GB constant size around the same maybe we can get it smaller okay so it's always around that size that's pretty good it's still way too big for Bitcoin Bitcoin can do four megabyte blocks at most not more so what do we do now well what we do is we split it up take that gig 2 gigabyte program and split it up into smaller four megabyte blocks now for those of you who are familiar with Bitcoin as you may know Bitcoin can fit up to four megabytes of computation per block you can make them smaller as well but the maximum size of each of these sub programs is for megabytes now if you this is all offchain this is not onchain basically just preparing a program to be verified on Bitcoin now you have the same program if you run this you just have split it up into smaller steps but you'll get the same result and between each program we get like an intermediate result so if you like multiplying you know you just like think of like multiplication like each of these programs could be just adding two plus two plus two and then you get the intermediate result which is 2 4 6 8 10 and whatever now when we build a bridge with this during the bridge in or peg in as the Bitcoin Maxes like to say you commit as an operator if I'm the bridge operator I will tell people and I commit to the running this exact program on chain and when you want to get your Bitcoin out I have to send you the Bitcoin from my own balance and then I'll go and reclaim the Bitcoin from the deposits and I have to Showcase that I actually ran this program correctly and if I did everything right if you withdraw withdrew your assets on to bitcoin everything's fine that we're done but if something goes wrong anyone in this room anyone on bitcoin anyone in any network can challenge me doing a simple Bitcoin transaction and then I have to reveal these intermediate results so remember if I'm doing multiplication I have to show like 2 4 6 8 10 now if I cheated and if I try to steal your Bitcoin one of these results will be wrong because otherwise I can't steal right if I run the program correctly that means you got your Bitcoin if I'm stealing this means I changed it and let's say if in the second to last result instead of eight I'm I say 9 well then anyone in the Bitcoin Network can challenge me and stroll that I'm cheating by just running this specific program this one step in a Bitcoin block and we can do this this can be done in a Bitcoin transaction and this is how you show that I cheated and you prevent me from stealing Bitcoin so the idea is very simple take a big program compress it split it up and then to show that something was wrong and prevent theft you just run one component on bitcoin this is very simple and this will be live on bitcoin AET probably next year changing how we use Bitcoin and defi forever thank you so much and if you want to check out the paper it's there thanks and see you around bye-bye