Overview of Hybrid L2 BOB: Merged Mining, Combining Bitcoin Security with EVM Liquidity

Written by: Karen, Foresight News

Bitcoin has strong security, but its limitations in liquidity have always been a shackle to its development. Especially when Bitcoin faces halving, miners' earnings will suffer significant reductions, undoubtedly posing considerable challenges to the entire Bitcoin ecosystem. Against this backdrop, Bitcoin L2 is expected to enhance miners' earnings. So what happens when Bitcoin's security is combined with EVM liquidity? The hybrid L2 BOB provides its own solution, allowing Bitcoin miners to validate without additional PoW and without incurring extra electricity costs through merged mining, potentially injecting new vitality into the Bitcoin ecosystem.

What is BOB?

BOB stands for "Build on Bitcoin," and it is an L2 tech stack aimed at supporting Bitcoin DeFi innovation and ecosystem development. It not only inherits Bitcoin's PoW security but also supports the Bitcoin ecosystem, including Ordinals, Lightning, and Nostr, while being fully compatible with EVM. Currently, BOB has launched on the Ethereum testnet Sepolia and plans to go live on the mainnet around the time of Bitcoin halving.

In terms of access, BOB supports users interacting with Bitcoin on the BOB network through the MetaMask Snap "BOB Bitcoin Snap." This means that users can later perform operations such as transferring Bitcoin, signing Bitcoin transactions, inscribing, and transferring Ordinals on MetaMask. According to BOB's documentation, the BOB MetaMask Snap is currently undergoing formal launch review by MetaMask. BOB also allows users to pay gas fees with cross-chain BTC and other ERC-20 tokens through meta-transactions and account abstraction.

Alexei Zamyatin, co-founder of BOB, is a Bitcoin enthusiast, researcher, and software developer, and he is also a co-founder of the Bitcoin DeFi project Interlay. As for the other co-founder mentioned by BOB, @domiki0_, the author has not yet found relevant information.

Yesterday, BOB announced the completion of a $10 million seed round financing, with a lineup of investors including overseas venture capital firms focused on Bitcoin and Bitcoin OGs, led by Castle Island Ventures. Other investors include Mechanism Ventures, CMS Ventures, Bankless Ventures, Alliance, Antalpha Ventures, Asymmetric, Bitcoin Frontier Fund, UTXO Management, Web3.com Ventures, Zee Prime Capital, ViaBTC Capital, Lucky Friday, Modular Capital, Daedalus, IOSG Ventures, Hypersphere, DFG, Nexo, among others. Angel investors include Dan Held and Domo, the creator of the BRC-20 token standard.

How does BOB work?

Initially, BOB launched on the OP stack and can inherit Bitcoin's security through a merged mining protocol (Bitcoin re-staking). Its ultimate goal is to settle directly on Bitcoin L1, and it may later achieve full state validation through ZK Rollups.

In terms of technical implementation, BOB's merged mining protocol OptiMine follows a hybrid consensus model, allowing any sidechain or Rollup connected to the L1 chain to obtain PoW security from Bitcoin miners. OptiMine separates block production from proof of work (PoW), inheriting the security of Bitcoin miners while eliminating reliance on centralized orderers and maintaining fast block times (keeping a 2-second block time).

Specifically, in the BOB merged mining protocol, the orderer is responsible for creating and signing blocks, while Bitcoin miners participating in the merged mining BOB L2 only perform validation. Since blocks are generated by the orderer and miners only validate, the orderer can stop block production in the worst-case scenario without creating forks or invalid blocks, thus preventing attacks from Bitcoin miners.

In terms of EVM compatibility, BOB utilizes EVM to create and execute smart contracts, primarily using the Solidity smart contract programming language for development. Most of the Bitcoin stack and applications built around it, such as the core SDK, Lightning, and Ordinals, are implemented in Rust. BOB also supports Bitcoin's Rust libraries and allows off-chain execution of Rust programs through RISC Zero zkVM, while using ZK proofs to verify the correct execution of EVM smart contracts. BOB states that it will consider this as a pathway to directly implement ZK Rollups on Bitcoin, where BOB itself can be proven in zkVM and verified through Bitcoin consensus.

Additionally, BOB provides trustless access to Bitcoin block and transaction data through a BTC light client, allowing EVM contracts to handle BTC transactions (e.g., P2P BTC swaps, Ordinal auctions, hash power tokenization, etc.), supporting a range of Bitcoin cross-chain bridges. BOB also plans to launch a bi-directional light client BTC bridge supported by BitVM.

BOB Stack

BOB Launches First Season Points Activity

On the same day it announced the financing news, BOB also launched the BOB Fusion Season 1 Points Program, encouraging users to actively participate and contribute to the construction of the BOB ecosystem. The first season activity allows users to lock assets and invite others in a non-custodial BOB Fusion time-lock contract on the Ethereum mainnet to earn BOB Spice points. Points represent contributions to the BOB ecosystem.

In terms of asset locking, users can earn 1 Spice per day for every $1 worth of assets deposited. Depositing tBTC and WBTC assets can earn 1.5 times the points. Specifically, the supported assets for deposit include:

1. Bitcoin-pegged assets: tBTC, WBTC (1.5 times points);
2. Stablecoins and Ethereum liquid staking tokens: DAI, eDLLR, rETH, STONE, USDC, USDT, wstETH (1.3 times points);
3. ALEX, ETH, eSOV (1 times points).

Friendly reminder: Do not directly withdraw funds from exchanges to the BOB FUSION smart contract address.

In addition to asset locking, users can also earn more points through an invitation mechanism. After completing the initial deposit, users can generate a personal referral code to invite others to participate in the activity. Referrers can earn 15% of the Spice from first-level invitees and 7% from second-level invitees.

The BOB Fusion Season 1 activity will end after the mainnet launch in April. At that time, the deposited assets will be unlocked for withdrawal around the Bitcoin halving and can be migrated to the BOB mainnet to continue participating in the second season activity. The BOB official website shows that there are 25 days left until the end of the first season points activity. If there is a delay in the mainnet launch, the assets will be automatically unlocked by May 15, 2024, at the latest (due to the use of time-lock contracts).

BOB Roadmap

BOB has also released a relatively detailed roadmap, showcasing multiple release phases from public testnet to Multi-ZK-Rollup. BOB L2 will be released in several phases, from Phase 0 to Phase 5, including public testnet, Bootstrapping BOB: Optimistic ETH Rollup, inheriting Bitcoin security through a new merged mining protocol (PoW re-staking), upgrading from Optimistic Rollup to ZK verification, implementing BTC staking orderers through BitVM, one-time signatures, and ZK proofs, and Multi-ZK-Rollup (simultaneously connecting ETH and BTC).

As mentioned earlier, initially, BOB will use the OP stack to launch as an Optimistic ETH Rollup, with BOB orderers handling transactions and blocks, then submitting data covering PoW commitments to Ethereum L1, where Ethereum will verify DA and PoW commitments, and settlement will also occur on Ethereum L1. With a native L1/L2 cross-chain bridge, it can access stablecoins (USDT, USDC), ETH/stETH, and ERC-20 assets. BOB also tracks the state of Bitcoin through a BTC light client, verifying block headers and accepting transaction inclusion proofs. This enables trustless cross-chain exchanges / auctions / contract executions.

It is important to emphasize that compared to the standard OP stack, BOB has made several changes and optimizations. For example, BOB will have its own governance to achieve community decision-making and implement changes, exploring alternatives to Ethereum for data availability (such as Bitcoin and Celestia), adding merged mining in a single centralized orderer setup, and adding the capability for Bitcoin miners to validate orderer work.

In the second phase, BOB will introduce Bitcoin PoW security into ETH Rollup. After BOB orderers handle transactions and blocks, Bitcoin miners will validate the state of the BOB Rollup, and only if the state transition is correct will the commitment be included as part of PoW, minimizing trust in the orderers. The orderers will then submit data covering PoW commitments, and finally, Ethereum smart contracts will verify DA and PoW commitments.

BOB's goal is to introduce Bitcoin as the settlement layer for BOB, which is still under research. It may be necessary to introduce ZK compression to BOB, likely as part of a fraud-proof mechanism, and may collaborate with ZK infrastructure providers (such as RISC Zero) for this. BOB states that its vision is to ensure that Bitcoin assets going to Rollup are protected by Bitcoin, while ETH assets are protected by Ethereum.

Recently, BOB also established a strategic partnership with the Bitcoin sidechain development platform Anduro launched by crypto mining company Marathon Digital. LayerBank, IceCreamSwap, bitSmiley, and iZUMi Finance will also deploy applications on BOB.

In summary, as an innovative L2 tech stack, BOB not only inherits Bitcoin's security but is also EVM compatible. With its launch on the mainnet and the improvement of more features, whether it can drive the Bitcoin L2 boom and become an important force in the Bitcoin DeFi space, promoting the development and prosperity of the entire ecosystem, remains to be seen.