Multicoin leads the investment, how does Arch build Bitcoin infrastructure?

Author: 1912212.eth, Foresight News

ZK-based products and related protocols are emerging like mushrooms after rain, and even parallelization is gradually becoming a trend. We see these two concepts continuously appearing on L2 and public chains, but they rarely combine on Bitcoin.

There are certainly factors related to Bitcoin itself, such as limited scripting language, lack of statefulness in data, and no native execution environment for running complex smart contracts. Because of this, there are still very few who dare to build challenging foundational execution layers on top of it.

Recently, the Bitcoin-native application platform Arch Network completed a $7 million seed round financing, led by Multicoin Capital, with participation from OKX Ventures, CMS Holdings, and others. The emergence of Arch aims to build a foundational execution layer for Bitcoin.

Introduction to Arch

The rising number of L2 solutions is overwhelming, with more than a dozen L2 solutions available so far. However, L2 essentially involves a bridging process between developers and users, requiring users to have a certain level of trust in the bridge and L2. Additionally, another obvious drawback is that liquidity will become fragmented, which can have adverse effects on the entire ecosystem.

What Arch aims to do is not an L2 for Bitcoin, but to directly introduce programmability onto Bitcoin. Arch Network is a parallelized PoS network that uses ZK proofs to enhance Bitcoin's native programmability. The network consists of a Rust-based zkVM (called ArchVM) and a decentralized validator network.

Arch draws inspiration from Solana and SVM (Solana Virtual Machine), and does not rely on any bridges or L2. It has three characteristics: programmability, parallel execution speed, and trustless interoperability and composability.

Operating Mechanism

In the Arch network, asset transfers and state changes on the Bitcoin chain occur on Bitcoin L1. Arch utilizes "state chains" on Bitcoin L1 to submit state changes in a single transaction, thereby reducing fees and ensuring atomic execution.

A specific transaction process is as follows: Arch calls Bitcoin transaction information, which includes basic execution information, such as the latest state, partially signed Bitcoin transactions (PSBT), and smart contract inputs. The Arch indexer continuously monitors new Bitcoin blocks, checking each transaction in the new block to see if it matches the calling format.

When the aforementioned transaction is detected, Arch compiles the relevant details and continues executing the smart contract. Subsequently, the smart contract generates a result state and an unsigned transaction to reflect the asset transfer during execution, as well as the proof of smart contract execution. Then, everything is transmitted to the validator network, specifically to the leader node. During each Arch Epoch, a leader is randomly selected, and the leader node propagates the received information to all other nodes in the network.

Each node verifies the proof and merges the state changes into the transaction before endorsing the described transaction. The leader consolidates signatures from these nodes until a predefined threshold is reached. Finally, once the transaction is signed by the necessary number of nodes, it can be broadcast on the Bitcoin network.

Currently, the lending protocol Liquidium on Bitcoin has been integrated into Arch, reducing its reliance on third-party oracles and technical service providers, and optimizing the user experience. Additionally, DeFi, stablecoins, oracles, and more can also be developed based on Arch.

Transaction Fee Model

Arch charges users a fee for each BTC transaction processed by the infrastructure. The transaction fee model operates through various mechanisms, where "per transaction fee" is charged to users for actions such as deploying smart contracts, transactions, Minting NFTs, etc. "Dynamic pricing" acts as a tip for fast lanes, dynamically adjusting based on network congestion and the complexity of the transaction.

The various fees collected above are then used for "fee distribution" to develop the network, with part allocated to node operators or validators, and another part reinvested into Arch's infrastructure development and optimization.

Although the official governance token and roadmap have not yet been announced, its core will focus on smart contract infrastructure development and the expansion of a decentralized node network. Currently, Arch will start with a selected group of trusted nodes, and after ensuring stability and security, will incentivize the community to participate in the expansion.