Bitcoin’s ecosystem is flourishing, with the creation of side chains being a key development. Bitcoin has held an unwavering position in the cryptocurrency and blockchain industry since its inception 14 years ago. Earlier this year, a developer introduced the Ordinals protocol, kicking off the era of “minting NFTs” on the Bitcoin blockchain. They later created the “BRC-20” token, which allows for token issuance on the Bitcoin network, expanding its capabilities and opening up new innovative applications.
However, Bitcoin and Ethereum have different design approaches, and scalability is a bigger concern on the Bitcoin network. As a result, many developers have recently proposed various solutions to enhance Bitcoin’s functionality, and creating side chains for Bitcoin has become a hot topic in the community.
One new side chain design, called Spiderchain, has been proposed by Botanix Labs. They aim to “port” the Ethereum virtual machine and operating model onto the Bitcoin network. Jameson Lopp, co-founder and CTO of Bitcoin self-custody company Casa, has also written an article about Spiderchain.
Side chains are independent blockchains that are somehow connected to the main network. Usually, both the main network and side chains use the same cryptocurrency (in this case, Bitcoin) and can leverage the security guarantees of the Bitcoin network. Side chains also offer Bitcoin users benefits that the main network cannot provide, such as scalability, programmability, and privacy.
However, most side chains face the challenge of establishing a “two-way peg” that allows Bitcoin to securely move to and from the side chain without the need for a centralized intermediary. This is where Spiderchain, developed by Botanix Labs, comes into play.
Spiderchain differs from other side chains in several ways. It operates as a Bitcoin Layer 2 Proof of Stake system, with decentralized multi-signature entities called “Orchestrators” running both Bitcoin and Spiderchain nodes. Users can simply deposit Bitcoin into a multi-signature wallet to participate. Orchestrators control the incoming and outgoing requests by managing the multi-signature wallet, ensuring the absence of malicious actors and maintaining activity.
Spiderchain operates in many ways similar to Ethereum, including compatibility with the Ethereum virtual machine, 12-second block times, and the use of Proof of Stake consensus to ensure network security. Its compatibility with the Ethereum virtual machine is a significant feature, as it allows developers to easily migrate existing Ethereum DApps to Spiderchain.
Spiderchain’s infrastructure differs significantly from most previous design solutions. It does not directly rely on miners to achieve consensus and does not use any form of merged mining. Instead, it utilizes multi-signature and staking bonds to establish a Layer 2 Proof of Stake system on Bitcoin. Importantly, Spiderchain can operate without making any changes to Bitcoin, meaning it does not require a soft fork or any upgrades.
However, Lopp’s blog post highlights some potential technical vulnerabilities of Spiderchain. One risk is that if the Bitcoin blockchain experiences more than five blocks reorganization, the peg to Bitcoin could be compromised, although the distributed funds in multiple multi-signature wallets make it unlikely to pose a catastrophic threat. He also points out that the cost of launching a side chain is high, making it challenging to realize this vision without addressing these issues. Despite years of research and discussion, progress in Bitcoin side chains has been slow. Nevertheless, Lopp believes that Spiderchain is a meaningful experiment and looks forward to its future development.
Willem Schroé, the founder of Botanix Labs, acknowledges that Spiderchain will initially operate in a centralized manner during the early stages of the network’s development until more users are willing to participate and stake Bitcoin.
References:
Jameson Lopp, Decrypt, bitcoinmagazine
Proofread by: Gao Jingyuan