Decentralized Verifier Networks: A New Mission for Bitcoin Layer 2 Nodes

Key Takeaways

• LumiBit enhances the security and decentralization of BTC Layer 2 solutions by introducing a Decentralized Verification Network (DVN) mechanism.
• LumiBit sets up BTC nodes and leverages the DVN mechanism for secure and decentralized information transfer between LumiBit and the BTC mainnet.
• This approach not only boosts platform security but also highlights the importance of Layer 2 technology in leveraging BTC’s strong consensus mechanism.

The Nativeness of BTC Layer 2

Bitcoin Layer 2 (L2) solutions, often favored for BTC scaling, are expected to adhere to the principle of “Bitcoin Nativeness.” As defined by Bitcoin Magazine, this entails:

• Using Bitcoin as its native asset
• Utilizing Bitcoin for settlement to enforce transactions
• Demonstrating a functional dependence on Bitcoin

However, not all BTC Layer 2s fulfill these characteristics or lack decentralized mechanisms to ensure stability in their Bitcoin nativeness. Those that don’t meet these criteria can be considered ‘Parasite’ Layers, lacking reliance on Bitcoin’s broad consensus for security and failing to provide credible expansion to the Bitcoin network.

LumiBit, a BTC Layer 2 based on ZK-EVM, adopts multiple strategies to ensure Bitcoin Nativeness. Beyond using Bitcoin for Data Availability (DA) and network gas, it integrates decentralized node networks, native signature interpretation, and inscription-based execution to offer a native user experience.

Ensuring Bitcoin Nativeness with LumiBit

As the largest cryptocurrency by consensus, Bitcoin’s significance lies in the trust and decentralization of solutions built upon it, particularly for Layer 2. For Layer 2, especially BTC Layer 2, user trust extends beyond the technology itself to the security bond with BTC’s main chain. This trust is rooted in:

• The ability to store and verify Layer 2 information on Layer 1.
• The safeguarding of assets from Layer 2 to Layer 1 against theft.
• Layer 2’s reliance on decentralized mechanisms to curb malicious actions.

LumiBit leverages Bitcoin’s decentralized and secure network to fortify trust in its Layer 2 solution. It enhances cross-chain communication security using Bitcoin’s multisignature mechanism, offering an innovative approach to inter-blockchain communication. LumiBit’s native BTC signature technology allows nodes to efficiently manage and validate signatures for BTC (UTXO) and LumiBit (ZK-EVM), bolstering core functions like Rollup, data availability (DA), cross-chain bridges, and more without incurring additional costs.

In contrast to other Layer 2 solutions that rely on centralized nodes for security and information reliability, LumiBit Nodes use a more decentralized approach for interoperability and maintaining native dependence on the BTC network. Through a DVN-like structure, all LumiBit information achieves consensus within this decentralized network before syncing with the BTC mainnet. This includes the involvement of BTC full nodes and mining pools in the consensus process. Moreover, once inscriptions are recorded, they are permanently preserved on the BTC network, with Bitcoin’s consensus mechanism ensuring the security of LumiBit’s information and assets.

The Structure of LumiBit’s DVN

The Decentralized Verifier Networks (DVNs) in LumiBit are vital components responsible for verifying the integrity and authenticity of data between the BTC mainnet and LumiBit, thereby ensuring secure cross-chain communication. These networks operate using an X-of-Y-of-N consensus mechanism, where required Lumibit-BTC nodes and random non-essential nodes validate data package states through their signatures before uploading them to the BTC mainnet. By leveraging a decentralized network of validators, DVNs reduce reliance on individual nodes or entities, enhancing the security and censorship resistance of the entire cross-chain communication system.

The primary workflow of LumiBit’s DVNs includes several key steps:

1. Data Submission: Cross-chain messages sent on the source chain are encapsulated into data packets and submitted to DVNs for verification.
2. Data Verification: DVN nodes independently verify the integrity and validity of data packets, involving checking cryptographic signatures, executing specific validation algorithms, or interacting with the source chain to confirm the authenticity of the data.
3. Consensus on Results: Validators reach a consensus on the data state through a predetermined mechanism. Once consensus is achieved and multi-signature is completed, the verification result is submitted to the BTC mainnet, either directly or indirectly.
4. Result Submission: After successful verification and multi-signature completion in DVNs, the data state is submitted to the BTC network for packaging. At this point, the data becomes immutable and is secured by the BTC network consensus.

Example

The LumiBit example of cross-chain bridge combined with Data Availability (DA) showcases how LumiBit Nodes use Decentralized Verifier Networks (DVNs) for cross-chain information transfer and consensus.

LumiBit Nodes are crucial in the cross-chain bridge, managing user fund transfer requests and ensuring precise 1:1 asset minting on LumiBit. For transferring assets from Bitcoin to LumiBit, users deposit assets in a bridge vault and inscribe a cross-chain request.

• Nodes use Bitcoin full nodes and LumiBit clients for state information and consensus verification on withdrawal requests.
• Required nodes must respond and sign requests within a time window for approval. Optional nodes also sign based on threshold signatures.

Once enough signatures are obtained, users’ assets are minted on LumiBit. After a certain period, LumiBit’s on-chain state is packed and compressed. Zero-Knowledge proofs of each state change are generated and consensus on DA requests occurs.

• Nodes verify these proofs and compressed transaction states, signing approved transactions.
• The signed data is broadcasted through a BTC multi-signature wallet.
• Once transactions are confirmed and packed, LumiBit’s historical state, including cross-chain minted funds, is updated on the BTC network, ensuring data availability and consistency through BTC’s consensus.

DVNs not only enhance LumiBit’s security but also underscore the importance of relying on Bitcoin’s strong consensus, expanding the role of Layer 2 nodes.