Taproot VS Drivechain: Different Explorations of Bitcoin Scalability

LayerTwo Labs
2023-10-23 13:40:56
Collection
Compared to Taproot, Drivechain's layered "off-chain scaling" solution has greater potential and lower costs.

Author: LayerTwo Labs


Taproot VS Drivechain: Different Explorations of Bitcoin Scaling

In November 2021, Bitcoin underwent its only code upgrade since 2017: the Taproot upgrade. This upgrade was like pouring quicklime into a calm lake, slowly heating the entire body of water and causing steam to bubble up continuously.

In the first 7 years of Bitcoin, there were 16 soft upgrades, while in the next 7 years, there were only 2 soft upgrades; the SegWit soft fork upgrade took 20 months, while the Taproot soft fork upgrade took 46 months.

In 2023, the Bitcoin ecosystem has been unusually active, with innovations springing up like mushrooms after rain. From the Ordinals protocol in March to the discussions around Drivechain in September, and the emergence of BitVM and Taproot Asset in October, the Bitcoin ecosystem seems to be gathering energy to return to the center stage, showcasing the powerful allure of the king of cryptocurrencies and the potential of open-source software.

Recent Major Bitcoin Ecosystems

1. Ordinals

Ordinals utilize the Segregated Witness upgrade to embed images, text, audio, video, and even code into Bitcoin transactions, as long as the size is under 4MB, writing them into the SegWit area and distinguishing and tracking each satoshi through a numbering and indexing system, thus enabling the issuance and trading of NFT assets on the Bitcoin mainnet. Subsequently, BRC20 tokens based on Ordinals emerged. In April of this year, the hype around Ordinals-based NFTs and BRC20 tokens reached its peak, attracting the attention of the entire crypto community.

2. Babylon

Babylon aims to bring Bitcoin security to PoS networks and DApps, allowing Bitcoin holders to stake their Bitcoin to enhance the security of PoS chains and DApps while helping users earn rewards.

Babylon's Bitcoin staking protocol uses cryptographic techniques to convert the actions of Bitcoin stakers attacking the PoS network consensus into the forfeiture of all or part of their staked Bitcoin on the Bitcoin network. This forfeiture only triggers when an attack actually occurs, ensuring the absolute safety of honest stakers' assets. This way, Bitcoin can become a staking asset similar to PoS native tokens without the need for cross-chain transactions.

The core technology involved is called "Extractable One-Time Signature" (EOTS). When using this technology, the same key can only sign once. If signed twice, the key can be decoded. The underlying signature algorithm is based on Bitcoin's native signature algorithm, so it is supported by the existing Bitcoin network.

3. BitVM

Recently proposed by the Zerosync team led by Robin Linus, BitVM is described as "achieving any computation on Bitcoin without changing the existing Bitcoin consensus or requiring any upgrades." The white paper states that this is accomplished through Op-Rollup, fraud proofs, Taproot Leaf, and Bitcoin Script.

According to crypto analyst @tmel0211, the core point of the BitVM proposal is that it achieves various program instructions similar to binary circuits through a Taproot address matrix or taptree, which together equate to complete contract execution. The minimal unit instructions are indeed completed by Bitcoin full nodes, and the infinite stacking of Taproot addresses allows for many complex computations. To some extent, it can be said to be Turing complete. However, the infinite stacking of Taproot addresses will only increase cost consumption; theoretically, it can achieve Turing completeness, but it is impractical.

Currently, BitVM is still in the discussion phase.

4. Taproot Asset

Recently released by the Lightning Labs team, Taproot Assets is a new protocol based on the Bitcoin blockchain that utilizes Bitcoin's latest upgrade—Taproot—to achieve greater privacy and scalability, providing core functionalities for developers to issue, send, receive, and discover assets on the Bitcoin blockchain. These assets can be stored in Lightning network channels and transferred through the existing Lightning network.

Taproot Assets are entirely based on UTXO, writing "simple code" into the script of the Taproot address, treating it as a condition for UTXO spending. In the asset issuance scenario of Taproot Assets, this simple opcode can be designated for total token issuance, issuance time, issuance targets, and other rules, and can connect to a set of multi-signature addresses to jointly trigger this opcode.

It is not difficult to see that the important foundation for the emergence of these ecosystems is the SegWit and Taproot upgrades.

SegWit and Taproot Upgrades

Taproot is an upgrade to the Bitcoin network that went live on November 14, 2021. Since the advent of SegWit, Taproot and Schnorr signatures have been highly anticipated Bitcoin technology upgrades.

The Taproot upgrade consists of three different Bitcoin Improvement Proposals (BIP340, BIP341, BIP342), which include: Taproot, Tapscript, and its core, a new digital signature scheme called "Schnorr signatures." Taproot aims to change how Bitcoin scripts operate, enhancing privacy, scalability, and security, bringing numerous benefits to Bitcoin users, such as improved transaction privacy and reduced transaction fees. It will also enable Bitcoin to execute more complex transactions, thereby broadening use cases and competing with Ethereum, especially in terms of smart contract functionality and support for decentralized finance (DeFi) and non-fungible tokens (NFTs).

To some extent, combined with the previous SegWit upgrade, the Taproot upgrade has opened the door for Bitcoin to implement more complex contracts.

SegWit is an update from 2017 that effectively isolated Bitcoin transactions into two parts by adding a "witness data" section that can support arbitrary data.

Comparison of the structure of non-SegWit blocks and SegWit blocks

Technically, the implementation of SegWit means that transactions no longer need to include witness data (which would occupy the original 1MB space allocated for Bitcoin blocks). Instead, an additional independent space is created at the end of a block for witness data. It supports the transfer of arbitrary data and has a discounted "block weight," cleverly keeping a large amount of data within Bitcoin's block size limit to avoid the need for a hard fork.

The implementation of Segregated Witness (SegWit) brought two significant changes to the Bitcoin network:

  • Signature data typically accounts for 65% of the data stored in blocks, which is removed from the main "base" block and stored in a separate block. This allows for more transactions to fit into each base block.

  • SegWit also introduced "block weight," technically increasing Bitcoin blocks from 1 MB to 4 MB; composed of 3 MB of signature data and 1 MB of transaction data.

SegWit & Taproot VS Drivechain

In simple terms, SegWit and Taproot enhance Bitcoin's ability to implement more complex contracts by changing block data and signature methods, allowing for more diverse data to be written into UTXOs or blocks, and achieving specific functions through some off-chain operations.

However, the undeniable foundational fact is that Bitcoin's capabilities are limited by its underlying script, and combined with factors like block size and block time, its scaling potential is very limited.

During the boom of Ordinals, we already saw this issue, as a large number of BRC20 transactions caused the Bitcoin network to become congested, with transaction fees soaring to hundreds of dollars, leading to community dissatisfaction.

The Turing completeness envisioned by BitVM, which applies the script of a single Taproot address to implement the minimal programming unit, cannot exceed Bitcoin's execution logic framework, such as hashlock and timelock, nor can it exceed the limited storage conditions. To achieve complex contracts on this basis requires combining a large number of addresses for taptree construction, which incurs greater costs and is slower.

Compared to on-chain scaling solutions like Taproot, Drivechain's layered, "off-chain scaling" solution has greater potential and lower costs.

Similarly, without touching Bitcoin's consensus mechanism, Drivechain only needs to add six new block messages designed in BIP300 to the blocks, using power-hosted addresses, supplemented by BIP-301's blind merged mining scheme, to achieve low-cost large-scale sidechain expansion of Bitcoin, with sidechains possessing the security of the Bitcoin mainnet and highly flexible design for scalability. The possibilities brought by Drivechain are theoretically limitless.

Logically speaking, Taproot Asset follows the same idea, where assets are on the Bitcoin mainnet, but transactions occur on the Lightning network. In reality, they can both use Drivechain to realize this, becoming sidechains within the Drivechain architecture, capable of achieving more functions beyond transactions and transfers. The Layer 2 Labs team itself is already promoting the construction of seven Drivechain sidechains, and sidechains like RSK also intend to transition into the Drivechain system after Drivechain is activated.

Blockstream founder and POW consensus inventor Adam Back once said in Layer 2 Labs' Twitter Space: "If we can introduce some new functionalities and scalability at layer 1, then Bitcoin can be solidified to some extent while continuing to innovate at layer 2. Bitcoin needs scalability and modularity to innovate and adopt new features more rapidly. Technologies like the Lightning Network have been helpful, but there is still more work to be done in addressing scalability and user needs, requiring technical solutions to provide users with better options, such as accessing real UTXOs on sidechains or drivechains. They recognize that Bitcoin adoption could grow rapidly, and technology needs to keep pace with the increasing demand, looking forward to the performance of Drivechain."

From Adam Back's perspective, Taproot represents new functionalities and expansions for Bitcoin at layer 1, while Drivechain is a way of innovating at layer 2. BIP300 was officially submitted as a PR by Bitcoin core developer Luke-jr

Bitcoin is the most secure cryptocurrency and a programmable software application. The exploration of the BTC community is resilient; after years of stagnation in innovation, merely opening up some block space and supporting more data types has sparked enthusiasm in the community and garnered significant market attention. It is foreseeable how Bitcoin will sweep the world on a larger scale after having greater potential space.

As supporters of Bitcoin, Layer 2 Labs eagerly anticipates the arrival of this day and looks forward to collaborating closely with developers in the Bitcoin ecosystem to achieve large-scale adoption of Bitcoin.

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