Daniel Fogg I Survival of the Fittest: Rootstock & Bitcoin L2s I Rootstock I Pragma San Fran 2024

[Music] so for this next talk we're going to bring on Daniel from rootstock labs and we're going to learn about all the stuff that's happening with root stock and l2s on bitcoin so please give Daniel a big round of applause hey everybody how you all doing cool I'm Daniel I'm from rootstock Labs I'm the chief executive officer we are the developers contributors and original Builders of rootstock and designers and Builders of Riff so it's 3:30 in the afternoon let's have a small amount of fun who in the audience has bought hold or mined Bitcoin okay if you've never touched Bitcoin at crypto conference I'm not quite sure okay let's do it the other way around who's never touched Bitcoin in their life okay that's a little bit better okay some maybe someone came in through usdc or some we got some eth Maxis here okay so our mission of root St Labs is to make Bitcoin work for everyone as you will probably know the Bitcoin ecosystem is full of toxic maximalism um neot technical Elites and people who want to basically build a new aristocracy uh with bitcoiners at the top we don't believe in that we're Bitcoin pragmatists we think that the Bitcoin network is an incredible cryptographic layer that can secure the entire global economy um and our role is basically to help scale Bitcoin so that everybody can interface with it and hopefully some of you people in the room as well um it's first time I've ever done this presentation so I I was under Express instructions uh not to I think it from cartic not to run uh a standard pitch so we've created something new so I'm going to tell you a little bit about rootstock and our relationship with the Bitcoin l2s seen Through The Eyes of this man which is Charles Darwin it is not the strongest of the species that survives nor the most most intelligent it is the one that is most adaptable to change everyone's aware of darwinian uh Concepts if you look at it through in the within the context of the global market and venture capital and crypto's role within that I sometimes I've actually described to my mom once what I do and I basically said if you imagine all of the money in the world and you imagine the pension plans well the pension plans need to invest in a whole range of different assets and the top of that they have Venture Capital which is very high risk and within Venture Capital you have crypto which is super super high risk um that makes it very competitive uh in fact it makes it ferociously competitive a little bit like a jungle to give you an idea of the scale of the opportunity and why so many people are flooding into Bitcoin l2s right now um Bitcoin has this enormous uh market cap 1.2 trillion uh but only 0.2% so two and a half billion is used in defi apps when you compare that to ethereum which has a lower market cap there's about 177% of all eth um and value stakes in defi apps that basically means that just in comparison to ethereum there's a $221 billion opportunity um that Bitcoin LTS are chasing out after so enter root stock the first and most secure Bitcoin L2 um the idea of root stock is relatively simple uh what if you took the security and store of value secured by proof of work that Bitcoin represents and you combined it with a programmability and composability of ethereum and that is rootstock it's an evm chain secured by the Bitcoin network using Bitcoin as the native asset was originally conceived back in 2015 and forged in the fires of the uh terrible Argentinian economy by a team of Argentinian developers who basically wanted to see off the back of a series of conversations with um Crypt Punk Nick Sabo and supported by Adam back's work what if they could fuse the these two CH chains together there's a couple of Concepts uh that we pioneered the first one is merge mining so originally uh uh in in in Bitcoin talks satosi Nakamoto proposed recycling the hash rate of Bitcoin to secure a second chain um we developed the merge mining protocol and we're the first to launch it and then Adam back work at um liquid uh proposed what if you could uh create some kind of mechanism to lock Bitcoin on the main Network and unlock a essentially a Bitcoin stable coin and a second Network um they did incredible work writing a white paper but we built it faster and launched it before they did so we were the first implementation of um of a Bitcoin side chain mayet went live in 2018 it's never gone down for six and a half years it is a tank an Argentinian tank if you will used to be called rsk for those that have been around long enough but we rebranded it to rootstock recently um because um that was what we call it anyway um so what have we been doing for six and a half years uh anyone in the room that's uh interfaced uh with any kind of blockchain L1 foundation will tell you that bootstraping an ecosystem is extremely hard uh we launched in a down Market we got caught um blindsided by the defi summer that happened in covid and this was not a Bitcoin summer it was an ethereum summer but we've been building so I'm going to tell you a little bit more about root stock tell you about our journey and tell you a bit about what Bitcoin l2s are and how we're different so the simple way to think about rootstock is as the most secure and first Bitcoin L2 we have three characteristics which are novel uh we are cryptographically economically and monetarily aligned with Bitcoin so first merge mining protocol every block every transaction um that is uh every bit every root stock block and transaction is hashed on the Bitcoin main net that means that every everything that is a processed on bitcoin um sorry everything that's processed on root stock is hashed into Bitcoin so the entire network is secured by bit proof of work uh Bitcoin is King in root stock there is no competing money token uh Bitcoin is the gas token Bitcoin is eth on root stock reason this matters is there is no alt token that's competing for monetary superiority on this Bitcoin side chain no problem competing for monetary superiority on other chains but on root stock um given our nature as a Bitcoin side chain we didn't want to compete with Bitcoin itself and then finally we have total economic alignment with the Bitcoin Miners and the Bitcoin Network so 79% of all of the transaction fees from rootstock um go directly to the Bitcoin miners that emerge mining with us so zooming out a little bit to try and find our place in the conc so launching back in 2018 and being and building from 2015 16 onwards um there are kind of two uh hype cycles that we're traveling along the first one is the original bitco the original um EVMS and the original layer ones that were built in the kind of Ico era between 2016 and 2017 um this was the uh peak of the hype cycle for ler 1es blockchain's right at the top of gotten as economic Hy hype cycle bunch of different things going on here so the launch of ethereum and EVMS basically allowed root stocks to be built and launched the enabler was the first development of D5 Primitives um and our creation of Burge mining um the amount of money that was slushing around so post uh during the Zer period and the icos meant that we were able to build a massive ecosystem but um multiple bare markets intense us friction has meant that this wave of l1's generally struggled um so those of you that know how the hype cycle continues will know that after six years on the hike cycle We have basically moved along and we're climbing up the plateau of productivity so the resilience of the network and the resilience of the ecosystem has really helped us over the last couple of years but we're also traveling along this second hype cycle so since the first one in 2016 uh Gartner now have their own blockchain hype cycle so you can start to see how um the different components within the wider blockchain development space are also traveling doesn't look like 2022 was particularly optimistic looking at this graph now everyone's sliding down the slope um but the big trigger for the Bitcoin l2s was the launch of zero knowledge rollups on ethereum and what and somebody essentially asking the question what if you could launch a zero knowledge rollup on bitcoin so along with that some of the bit VM research run by Robin Linus in 2023 um the Advent of opack and the launch ofer very successful L2 ecosystem and then inflated by the ETFs the Bitcoin defi movement which grew between 2021 2024 a lot of VC interest in experimentation has meant that while it's still very early and no optimistic rollup has been launched on bitcoin to date there are nearly 80 teams working on this today and there are 20 uh Bitcoin side chains which are live on Main net so um interesting thing to note here is that we're now actually driving Innovation within this uh by launching bit vmx which is an implementation of the bit VM protocol uh but we think uh we can launch it to build a bridge to bitcoin a better bridge to bitcoin which is 10x cheaper than bit VM so the message here is quite simple we're traveling along two hype Cycles simultaneously one in which we're reaching maturity um happily skating along the pl plateau of productivity uh but also trying to drive Innovation with our work with bit vmx evolution in numbers if you've been around for long enough this is generally what your graphs look like some UPS some downs and some roller coasters so most exciting thing about rootstock is over 160 protocols now live on the network and as you can see we've been we've seen incredible growth over the last 12 months alone nearly 3,000 Bitcoin locked into two-way Peg and the network is secured by nearly 60% of the entire hash rate of the Bitcoin main chain so that means that 60% of the hashing power that's securing Bitcoin is also securing root stock as well what does root stock look like today it's a very simplified diagram of how root stock functions you have Bitcoin core sharing hash rate with the merge mining protocol with root. core which is an evm and then there are two Bridges to bitcoin which allow bit coin to flow between the Bitcoin Network and rootstock the first is the power Peg which has been live for six and a half years and we've evolved the power Peg over the last six and a half years from what was originally a Federated multisig into something which is now the PO Peg and we believe that we've through our defense in depth principles we've built the um the the the most resilient and most performant Bitcoin bridge in existence today and with bit vmx we're going to be developing the union Bridge which is going live in 2025 this is a mechanism to use disputable computation to bridge Bitcoin from the Bitcoin Network into a side chain but rootstock is more than just a blockchain it's also an ecosystem so we have some of the leading D5 protocols from ethereum now on root stock that includes Sushi swap Unis swap symbiosis as well as some of the Native um ogs that built and launched on root stock back in the day including Sovereign one of the biggest and best known Bitcoin def5 protocols in the world and money on chain the first Bitcoin collateralized stable coin which launched uh over five years ago we've also um done a big push to make sure that the best developer tools from ethereum are also available for root stock to allow people to build on Bitcoin in an easy and comfortable way so that means that the graph gelato um Alchemy third web hard hat covalent and many others are now available to build on root stock so that means that the development tools that ethereum devs are comfortable with and familiar with you can now use to build on a network that's cryptographically economically and monetary aligned to bitcoin okay here's the spicy bit so um we launched the first Bitcoin SP uh side chain uh back in 2018 um evm compatible fully secured by the Bitcoin Network um the first implementation of merge mining um and uh the unit of account being Bitcoin itself following that there was a a batch of other what are called Bitcoin l2s so interesting important thing to note here is that in ethereum an L2 means something very specific but in Bitcoin it means anything that's used to scale the Bitcoin Network so that could be an evm chain like root stop or it could be a state Channel payment Network like lightning shortly after rootstock lightning launched and shortly after lightning liquid launched liquid is Adam backs protocol which is a semi- permissioned side chain uh which is primarily used by large exchanges and asset managers to move and interact with Bitcoin and very successful in its own right they just raised a significant amount of money and we're hugely grateful to them to uh for for shining a light on the pathway that has been rootstock Stacks launched into 2021 it's become dominated by nft and a whole range of exciting use cases and I would call these uh these four the kind of four ogs of the Bitcoin side chain world since then we've seen a whole range of different protocols launch and I think this is where things get a little bit murkier um you have a number of different consensus mechanisms being used to secure these side chains you have unit of accounts which are not Bitcoin and are supporting a secondary token and in some cases you have side chains which are not even being secured by Bitcoin and don't have Bitcoin as a native asset this is where the idea of Bitcoin L2 starts to break down and um in the grand tradition of crypto I would encourage anybody engaging with these protocols here to do your own research um it is widely understood and widely reported that it's not clear where the tvl comes from and it's not clear in some cases what the consensus mechanism even is but it's a wide space for experimentation we encourage that and we hope that as some of these protocols mature they uh start to take security a little bit more seriously I'm going to give you a run through some of the characteristics of um of root stock here so um firstly secured by proof of work every block every asset and every transaction on root stock is secured by the Bitcoin main net uh why it's a mutable Ledger maximal decentralization um it's extremely resistant to attacks and it has an economic model which means it's probably going to be around for many decades and many centuries on the contrary other l2s they have different mechanisms nothing wrong with proof of stake and principle but if you are securing a secondary Bitcoin network using a different consensus mechanism the trust assumption start to break down as you move Bitcoin out of the main Network into a side chain so I think this is where you know if you're thinking about programmatic Bitcoin which is core to what root stock is you want to make sure that you're also inheriting the best of what Bitcoin is not just the programmability in root stock but also the security and the decentralization and the store of value as it moves outside of um the kind of traditional consensus mechanism in Bitcoin um the trust assumption start to break down anchored to bitcoin through merge mining so I mean some novel components here so uh I'll summarize exact how how merge mining works so a template is sent out into the mining pools um whenever that merge mine with with root stock every one of those miners runs a root stock node and is there's zero one different in the header which determines that that is a mergem root stock block as well so you can see on the Bitcoin main net for over six and a half years now there have been root stock transactions and root stock blocks that are anchored into the Bitcoin main net so we have been present on the Bitcoin main net for some time uh rootstock directly contributes to the Bitcoin security budget we fund the Bitcoin miners we support the decentralized business model that is Bitcoin and the miners receive rewards in Bitcoin not a secondary token or a um yeah an altcoin other l2s do things slightly differently so some share the fees with miners uh or validators in a non- BTC token um State validation is determined on ethereum as opposed to um on the side chain or on bitcoin main net and there are many l2s which are not anchored to bitcoin at all which asks the question are they really Bitcoin l2s what are they at all um when you bridge Bitcoin to root stock you use the proof of work Peg and this is because Bitcoin is the native gas token you need Bitcoin to operate on rootstock uh longest running Bitcoin bridge in operation the defense in depth principle is essenti the analogy I'd use is that um you know if you're going to try and break into a bank you need multiple levels of security before you get there or if you're going to try and attack the heart a castle you need multiple levels of security and defense before you can get in this is really what the defense in depth depth principle is all about um there are over 19 different security uh walls in order to inter in order to H in a hostile way touch the power Peg and it's never gone down um security audits which have been which are run on an annual basis um essentially determine that we've we've built something that in terms of a bridge to bitcoin is pretty much as good as you can get given the given the challenges that Bitcoin has for bridging Assets in and out but this is why um we are building bit vmx so bit vmx is our own implementation of Robin linus' bit VM um architecture which is a mechanism to uh perform disputable computation on bitcoin itself I heard it recently described as a rub Goldberg machine in order to get around the challenges that touching Bitcoin um uh uh creates um I think perhaps given this in ethereum conference many of you might not have heard about bit VM before but what I can say um and you know we we watch this sector very closely is that there are no optimistic rollups on Bitcoin today no one has built a ZK verification and hashed it onto the Bitcoin main net uh what you're seeing at the moment is a number of teams trying but no one's done it yet and we're confident that um the bit vmx uh architecture will be one of the first so this is essentially going to be a secondary bridge between Bitcoin and rootstock we chose evm um primarily because if you're going to scale Bitcoin you want to do so in a way that means the maximum number of developers the maximum number of protocols and the maximum number of tokens can connect with and interact with that Network so it was a scalability choice it's been proven right um it means that rootstock is widely interoperable launching protocols and launching assets on the network is relatively straightforward and um it means that we don't need to build custom tools we don't need to engage in N programming languages and um we uh yeah we we basically don't need to fall into the Trap of Bitcoin l2s which have to kind of engage in non- web through environments for development um wrapping up a little bit here so D5 protocols if you uh I was looking at one of the presentations this morning did a really good job of explaining how different l1s and l2s tend to focus on a particular Community or particular use case and if you think about rootstock is relatively simple it's defi on bitcoin with Bitcoin um so we've been bringing tier one ethereum protocols over to rootstock now uh for several years and over 160 protocols including some of the largest on ethereum as well as the native Bitcoin uh defy apps um and I think this has meant that the robustness of those protocols and the complexity of the ecosystem and the opportunities within that ecosystem for putting your Bitcoin to work has um yeah has basically meant that rootstock has differentiated itself as the number one Bitcoin def defy ecosystem um but given that Bitcoin was the native asset we kind of struggle with this uh with this uh uh Bitcoin Builder scaling problem which is how do you create a value capture mechanism if the native token and incentive mechanism is directly connected to bitcoin itself and the answer is we created an ecosystem scaling Dow which uses riff as the governance token as a builder incentives Market to encourage pooling of uh transaction fees from all of the builders on rootstock um distributes 19% of the transaction fees from rootstock into the Dow uh the other 79% um and going to the um going to the Bitcoin Miners and the 2% going to the pagnes which essentially is is going to create a a situation where if we're successful rootstock Labs my role and the centralized organization that supports the network today can disappear so you know the message here is that rootstock has survived it's been a long journey for us uh but we're confident that what we've built in the first Bitcoin side chain and the path we've shown for others is going to survive well into the future it's hard being first um you have to solve the problems before anyone else does instead of being able to uh copy and clone um and we're really excited about what the future of Bitcoin l2s looks like so in summary the most secure longest running Bitcoin L2 the best developer tools and the most advanced defi ecosystem which is what we consider to be a true Bitcoin L2 um if you are building a protocol that needs to connect with the Bitcoin Network you need a security mechanism that you can anchor into if you are trying to um interface in any way with the Bitcoin network instead of having to go through all the complexity in doing so you can uh write a smart contract or connect in or Bridge into to the rootstock network and it's the simplest way to program with Bitcoin today thanks very much [Music]