The first modular bitcoin and L2 liquidity cross-rollup bridge protocol
You don’t have to be great to start, but you have to start to be great.
By Zig Ziglar
As we entered 2024, the wealth impact of Bitcoin has become increasingly apparent, with its price rising from $16,500 at the beginning of the year to $42,000. In addition to Bitcoin itself, market funds have also flowed into its ecosystem.
One notable example is the surge in the BRC-20 sector under the Ordinals protocol. The market size of BRC-20 tokens has now exceeded $4 billion, marking a nearly 40x increase from the $100 million in March of the same year. This growth has spurred continuous innovation and development across the entire Bitcoin ecosystem.
The current market attention on the Bitcoin ecosystem is primarily focused on two aspects. First is asset issuance protocols, primarily Ordinals, Atomicals, Runes, PIPE, Taproots Assets, and others. Second is scaling solutions, such as the Lightning Network, RSK, Stacks, RGB, and BitVM.
Given the future macroeconomic environment and market conditions, the Bitcoin ecosystem holds a promising outlook. Not only will popular cryptocurrencies like BTC and ORDI have significant room for appreciation, but there will also be new opportunities for 100x coins within the Bitcoin ecosystem.
Bitcoin assets need a liquidity explosion
The market dominance of BTC single tokens stands at 47.4% of the overall cryptocurrency market value, with the majority of these tokens remaining inactive in on-chain addresses.
The Bitcoin network operates as a decentralized ledger based on Unspent Transaction Outputs (UTXO). While it supports opcode scripts, it lacks Turing completeness and cannot facilitate the implementation of virtual machines. As a result, unlike Ethereum, token issuance and the development of a robust DeFi ecosystem are not possible on the Bitcoin mainnet, leading to a lack of liquidity for BTC.
The demand for token issuance is being addressed by solutions based on UTXO occupancy technology, exemplified by the Ordinals Protocol, leading to a surge in script assets. However, these script assets are currently limited to the Bitcoin mainnet.
Simultaneously, various expansion solutions for the Bitcoin network are emerging, including protocols like Taproot Assets and Runes, which represent the Bitcoin meta-protocol, as well as second-layer networks or sidechains represented by BitVM. With these solutions, the DeFi ecosystem of Bitcoin is becoming increasingly accessible.
Consequently, the seamless and efficient movement of assets between the Bitcoin mainnet, Bitcoin second-layer networks, and sidechains has become a pressing and natural requirement. Bitcoin requires a cross-chain infrastructure to facilitate the explosion of liquidity.
The current Bitcoin cross-chain bridge has its limitations
Common Cross-Chain Bridge Models
Asset locking on the original chain + asset minting on the target chain model
This model can ensure unified liquidity and instant guaranteed finality, but it obviously cannot support native assets.
Liquidity pool model
This model requires setting up liquidity pools on both the original chain and the target chain. It can ensure instant guaranteed finality and native assets, but unified liquidity cannot be achieved.
While transfers from Bitcoin’s mainnet to its second-layer networks are possible, the assets are not native and the speed and transaction costs are less than ideal.
Transfers between Bitcoin’s second-layer networks are not yet supported, necessitating relay through the mainnet and resulting in prolonged wait times and high gas costs for users.
oooo Bridge Protocol will address these issues gradually.
Overview of oooo Bridge Protocol Architecture
oooo uses an adaptive Endpoint-Relayer module to facilitate integration with different blockchains. Depending on the blockchain architecture, the Endpoint can be an EOA (EVM), smart contract, or Address.
oooo employs zk-SNARK to bundle all transactions and roll them up to the Bitcoin mainnet, ensuring decentralized transaction information and providing security for dispute resolution.
oooo utilizes the Unified Liquidity Module to manage liquidity across the entire chain, catering to different assets and liquidity provision methods. Whether it’s Maker providing liquidity or Liquidity Providers depositing into Pools, the Unified Liquidity Module enables automated liquidity allocation and management for both native and wrapped assets.
To address potential transaction disputes in Maker mode, oooo utilizes a Dispute Resolution Module based on smart contracts and Bitcoin zk-rollup. Senders and Makers can resolve disputes by submitting transaction evidence to the contract.
Security always comes first
Security is the primary concern for users of cross-chain bridges, and it remains the Achilles’ heel of all cross-chain protocols.
In 2022, there were 12 security incidents related to cross-chain bridges, resulting in a total loss of approximately 18.9 billion US dollars. In 2023, the losses from cross-chain bridges ranked fourth among all security incidents, constituting about 7% of the total loss amount.
How does the oooo Bridge Protocol ensure security?
Multisig and Verification Mechanism
- Multisig is a fundamental technology widely supported by various architectures of blockchain networks. Its core feature is that a transaction initiated by a wallet requires validation and signatures from multiple parties before it can be executed. By utilizing the multisig mechanism, oooo has established a validation module consisting of multiple validators, and a transaction is only executed when it is approved and signed by over 2/3 of the validators.
- Among oooo’s validators are included the blockchain security custodian Safeheron. oooo has always believed that decentralization is the guarantee of blockchain security, which requires oooo’s validator network to have sufficient diversity. Therefore, oooo has been committed to collaborating with a wider variety of teams and roles, including miners, DEX, node providers, and wallets.
Audit for Contracts
Smart contract audit involves a detailed analysis of the smart contract code of a protocol to identify security vulnerabilities, poor coding practices, and inefficient code, and then propose solutions to address these issues. The audit helps to ensure the security, reliability, and performance of decentralized applications across Web3.
During the smart contract audit, a team of security experts will review the application’s code, logic, architecture, and security measures in both automated and manual ways to identify any potential issues. They specifically look for any code that may be susceptible to malicious attacks and any areas that need improvement.
The smart contract code will ultimately be deployed to the blockchain. Once the contracts are live, they are accessible to anyone — from end users to malicious attackers — which is why all vulnerabilities must be addressed before launching or updating decentralized applications.
Upon completion of the audit, the auditors will release a summary report providing detailed information about the audit results, solutions, and any other issues, as well as a roadmap for addressing existing problems in the future.
oooo collaborates with well-known contract audit firms in the industry to maximize the security of its own contracts.
Transaction Dispute Resolution
Within the Maker System, oooo has implemented an automated dispute resolution mechanism based on zk-rollup and smart contracts to address potential transaction disputes that may arise during cross-chain transactions.
Three scripts or contacts are deployed on the main chain to validate the transaction in arbitration.
MLM (Maker Liquidity Management) Scripts/Contract
Manages surplus margin deposits and processes remuneration for senders.
TM (Transaction Mapping) Scripts/Contract
Mapping and verify the correspondence between the source and the target transactions.
ZK-TV (Zero-Knowledge Transaction Verification)
Employ zero-knowledge proof technology to demonstrate the presence and legitimacy of cross-rollup transactions. “Existence” denotes the ability to verify both the source and target transactions on Layer 1 and confirm that they indeed occurred on their respective Layer 2. “Validity” entails validating the user’s intention behind the source transaction and ensuring that the maker’s payment outcome in the destination transaction aligns with predetermined regulations.
The Bitcoin L2 ecosystem is experiencing rapid growth, with new L2 and cross-chain infrastructure emerging almost daily, evoking feelings of both anxiety and excitement. If you share our sentiments, we welcome you to join the oooo community and collaborate with us in building together.
