New Opportunities for Bitcoin L2? A Detailed Explanation of SatoshiVM and the Testnet Interaction Process

Author: L2

Even if the spot ETF is approved, the market still maintains a long-term enthusiasm for BTC-related concepts.

Data from January 14 shows that the cumulative fees consumed by inscriptions on the Ordinals protocol have reached 5,600.22 BTC, indicating the continued activity in the Bitcoin ecosystem.

At the same time, the L2 narrative based on Bitcoin still has a market.

Concerns about Bitcoin's block space, along with previous instances where inscriptions raised Bitcoin transaction fees, highlight the necessity of reducing fees on the Bitcoin mainnet, which has also driven related projects to perform well in the secondary market.

For example, STX's token price reached an all-time high last week.

In this context, other Bitcoin L2 projects are eager to try, including the recently frequently mentioned SatoshiVM—a decentralized Bitcoin ZK Rollup Layer 2 solution that is compatible with the Ethereum Virtual Machine (EVM) ecosystem and uses native BTC as gas fees.

Bitcoin, L2, ZK… these high-value concepts combined easily trigger FOMO; meanwhile, the project is currently being widely discussed on Twitter, but it remains unclear whether this is a "collective marketing" effort or a unified "value discovery."

However, the heat at least indicates that there may be short-term opportunities.

Thus, we dug into the project's documentation and compiled the currently available testnet interactions and initial token issuance information to provide a reference for everyone.

What is SatoshiVM?

SatoshiVM connects the EVM ecosystem with Bitcoin, enabling the Bitcoin ecosystem to issue assets and develop applications.

From the name, it is not difficult to see that the project pays homage to Satoshi Nakamoto, and the "VM" refers to the virtual machine, which allows for the execution of smart contracts and asset issuance, thus providing a possibility for Bitcoin's current weak scalability.

The most critical aspect lies in the ZK Rollup concept of SatoshiVM.

By using Rollup technology to bundle multiple transactions into a single batch and validating them on the Bitcoin main network as a single transaction, it ensures the same level of security as the Bitcoin main network, guaranteeing the validity and availability of data;

At the same time, using technologies like Taproot and Bitcoin Script, it performs on-chain verification of contracts without altering the consensus rules of the Bitcoin network, thus completing the computation of fraud proofs.

In simple terms, since ZK Rollup can serve as an L2 for Ethereum, it can also serve as an L2 for Bitcoin.

To put it more colloquially, most of the work of L2 is not executed on the mainnet but is submitted to the mainnet after execution. Therefore, theoretically, transactions can occur off-chain and then the packaged transaction results can be submitted to the chain in bulk.

L2 executes transactions, while L1 is responsible for settlement; the only difference is that the mainnet is replaced with Bitcoin.

It is worth mentioning that SatoshiVM uses native BTC as the gas for EVM. Once the project develops, the more applications created on this L2, the more active the ecosystem will be, and miners will naturally welcome it.

To be more specific, let's take a look at the design structure of SatoshiVM:

Settlement Layer

This layer provides data availability, ordering, and proof verification for the SatoshiVM chain. It allows users and dApps to send messages and assets between Bitcoin and SatoshiVM. Bitcoin serves as the settlement layer, with bridge and aggregation scripts deployed on the Bitcoin network.

Ordering Layer

This layer consists of an execution node responsible for executing transactions submitted to the SatoshiVM sorter and transactions submitted to the L1 bridging script, generating L2 blocks. It also includes a Rollup node to handle batch transactions, publish transaction data and block information to Bitcoin to ensure data availability, and submit validity proofs to Bitcoin to ensure final results.

Verification Layer

This layer includes a coordinator that assigns proof tasks to provers and forwards the generated proofs to the Rollup node to complete the finality verification of Bitcoin. It also includes a prover pool responsible for generating validity proofs to verify the correctness of L2 transactions.

How is it different from other Bitcoin L2s?

Strictly speaking, rather than being an L2, SatoshiVM is more like a "bridge."

Here, the bridge refers to introducing the development format and execution methods from Ethereum, allowing you to engage in activities similar to those on Ethereum, such as issuing new digital assets or building applications, but using the Bitcoin network for payments and transaction processing.

Previously, due to the limitations of Bitcoin's original design, various broad L2 solutions like the Lightning Network, sidechains, and state channels were very active, focusing more on finding ways within the ecosystem:

That is, making Bitcoin itself faster and better in performance, or allowing Bitcoin to handle transactions in certain situations.

Later, Stacks sought to enable Bitcoin to support the operation of smart contracts and Dapps to support more functionalities.

Note that performance and functionality are two different concepts. With this clarification, SatoshiVM's comparative object should be Stacks.

Let's compare the two in terms of technical implementation and integration with Bitcoin.

Technical Implementation and Compatibility:

• SatoshiVM: Capable of running Ethereum-compatible smart contracts and using native BTC as fuel.

• Stacks: Uses different technology, has its own Proof of Transfer (PoX) consensus mechanism and Clarity smart contract language. It does not directly support EVM but provides a different method to create smart contracts and applications on Bitcoin.

Integration with Bitcoin:

• SatoshiVM: Achieves integration with the Bitcoin main chain at the Layer 2 level using ZK Rollups technology while maintaining compatibility with EVM, allowing developers to use familiar Ethereum tools and languages for development.

• Stacks: Directly adds smart contract and DApp functionality on top of Bitcoin's security through its unique PoX consensus mechanism.

To make an inappropriate analogy, SatoshiVM is more like a universal solution; its L2 design can serve both Bitcoin and Ethereum, and even other L1s, but due to narrative reasons, serving Bitcoin seems to be more popular;

Whereas Stacks is more like a targeted remedy, identifying issues in Bitcoin's structure and addressing them, which may not be applicable to other L1s.

At the same time, we have conducted a comprehensive comparison of all the Bitcoin scaling solutions mentioned above, as shown below:

Current Testnet Situation and Participation Opportunities

Currently, the SatoshiVM testnet is live, and users can participate in its testnet interactions using Unisat or MetaMask wallets, including transferring tokens, performing swaps, and other operations.

From the data, there are currently over 7,000 accounts interacting with the testnet, with a total of 46,000 interaction addresses and approximately 200,000 transactions completed.

At the same time, although SatoshiVM has not officially indicated or hinted that interactions will lead to airdrops, the increasing daily new accounts and active accounts show the market's FOMO sentiment as the project is widely discussed on Twitter.

However, the other side of the heat is competitive pressure. The result is that those who interact more will win over those who do not interact, and those who interact more will win over those who interact less.

But considering the "0-cost" nature of the testnet, participating in it incurs no cost, making it a reasonable strategy to aim for small gains at zero cost.

Below are detailed interaction steps for players who need reference (images sourced from Twitter user @FareaNFts):

1. Download the Unisat wallet, and in the wallet's settings (gear icon), switch the network to the testnet (Testnet).

2. Go to the faucet to claim test tokens tBTC, entering the amount to claim and your Unisat address:

Faucet URL: http://bitcoinfaucet.uo1.net/send.php

3. Add SatoshiVM's network information in MetaMask according to the following rules:

Network Name: SatoshiVM Testnet RPC: https://test-rpc-node-http.svmscan.io Chain ID: 3110 Currency symbol: BTC

4. Complete the transfer of BTC across different networks.

Visit the website ridge.satoshivm.io and connect your MetaMask and Unisat wallets.

Deposit the tBTC you claimed in Unisat to this website, while withdrawing with your MetaMask wallet (on the same testnet).

5. Transfer SAVM tokens (the project's future official token).

Go to the "SAVM Bridge" page.

Claim tSAVM from the faucet.

Deposit some tSAVM and confirm the transaction in your MetaMask wallet.

Withdraw some tSAVM and confirm the transaction in your MetaMask wallet.

Additionally, the mainnet token for SAVM will officially launch on the 19th.

In terms of rule design, SAVM will be supported by another well-known Bitcoin ecosystem project, Bounce, with its corresponding token being AUCTION. Bounce uses an Initial Liquidity Offering (ILO) model, meaning SAVM will have an initial liquidity pool based on the AMM model for participants to swap;

The prerequisite for participating in the ILO is holding Auction, with a certain probability of being randomly selected to gain trading qualifications, while also continuously earning a share of trading fees from this initial liquidity pool and receiving ETH rewards. This provides a relatively stable option for those who want to participate in the token issuance but are concerned about the risks of AMM exchanges.

However, it is important to note that holding Auction also means facing the risk of price volatility of the token itself, and whether it will be worth the price is subjective.

Issues Worth Noting

Finally, although the concept, technology, and narrative of SatoshiVM seem promising, the author still noticed some issues worth paying attention to during the information integration process.

First, since it is an L2, is the L2 sorter centralized or decentralized? Who will act as the verification nodes for L2, and what are the rules for becoming a node? All of this is currently opaque, feeling more like a token-first approach with details to follow.

This is common for meme projects, but it seems a bit rushed for an infrastructure project.

Second, the project has not publicly disclosed specific team and past information. L2 involves a large number of transactions, and security and stability are prerequisites; the lack of a team endorsement in this space becomes a point of concern; although the enthusiasm for the Bitcoin ecosystem is largely driven by retail investors, if key infrastructure lacks a high-end team, it can easily raise doubts.

Third, the project's current GitHub does not contain substantial information, and the open-source status of the L2 itself is unknown.

Finally, scams exploiting the FOMO sentiment surrounding SatoshiVM are rampant, with even "gold standard" users having more followers than the official Twitter account posting phishing links for airdrops, and many blue-check accounts in the comments section collaborating in the act, using the psychology of seeking bargains to lure users into linking their wallets and thus stealing assets.

At a time when the Bitcoin L2 space is heating up, maintaining caution and seeking non-consensus opportunities is a more sustainable choice.