exSat’s Docking Layer Approach
Last updated
Last updated
The philosophy of the exSat Network is to extend Bitcoin's powerful and well established trust based on the data and assets within the Bitcoin ecosystem. This allows for more possibilities in functionality, scalability, utility and interoperability of Bitcoin assets and empowers the omnichain application ecosystem. Ultimately, it aims to provide an intent-centric user experience for more Web3 users.
At the core of exSat's innovative approach lies the philosophy of extending Bitcoin's powerful consensus by leveraging the data and assets within the Bitcoin ecosystem. This data and asset-driven integration unlocks new possibilities for Bitcoin assets, empowering a powerful bedrock for the omnichain application landscape.
As the Docking Layer for extending Bitcoin, exSat works both "downward" and "upward":
Downward: it maps Bitcoin‘s core elements such as block data and state to exSat, while establishing an asset custody across exSat and Bitcoin. This allows Bitcoin developers to fully leverage Bitcoin's consensus and exSat’s scalability in a more flexible way, unlocking new DApp development models. For instance, developers can create "modular" DApps where trust remains anchored to Bitcoin, while business logic is executed on exSat.
Upward: exSat provides trusted data and assets from Bitcoin to DApp developers and various Bitcoin Layer 2 solutions, such as those built on Antelope, Rollups, or other Bitcoin scaling projects. This enables vast performance improvements, customizable blockchain solutions, and enhanced application scenarios, contributing to Bitcoin's widespread adoption.
In this way, exSat serves as a crucial component of the Bitcoin ecosystem, liberating BTC assets and trust from the Bitcoin network and making them accessible to the broader Bitcoin ecosystem. This unlocks limitless potential for the growth and development of Bitcoin applications.
Most blockchains operate on a state machine model, and Bitcoin adheres to this framework as well, comprising three key elements:
State (Sn): This represents the current state of the blockchain, such as account balances or the present state of smart contracts. In Bitcoin's case, it refers to the set of UTXOs (unspent transaction outputs).
Transactions (Txs) : The transactions are external inputs which trigger the State switch from current to the next. In Bitcoin's case, it refers to the new block data.
State Transition Function f(x): This function describes how the blockchain’s state transitions from the current state to the next based on the new transactions. For Bitcoin, it encompasses all rules applied to UTXOs, such as the transfer rules.
exSat’s Data Consensus Protocol decentralizes and securely maps these three elements of Bitcoin onto the exSat network. This process includes:
Storing Bitcoin's State Data: Using exSat's RAM to fully record Bitcoin’s state ,which's the complete set of UTXO data.
PoW + PoS for Block Updates: Synchronizers (mining pools) and Validators upload and verify the latest Bitcoin blocks on exSat in a decentralized pattern.
Transaction Parsing: Each transaction from the uploaded Bitcoin blocks is parsed within exSat smart contract to update UTXO data. This parsing capability is also available to DApps, allowing them to filter their relevant Bitcoin transactions and build Bitcoin-based application databases directly on exSat.
exSat stores the full UTXO dataset, which's directly accessible by smart contracts. It's important to note that for DApps, this UTXO data is read-only. To modify the UTXO data, a transaction must be sent to the Bitcoin network. The Data Consensus Protocol will then sync the latest Bitcoin blocks onto exSat and parse them to update the UTXO data.
Since exSat begins syncing blocks from Bitcoin's block height 840,000, the storage and update of UTXO data are handled in two parts:
UTXO Data Generated Before Block 840,000: This data was parsed and uploaded by exSat. The data is under audit by multiple security agencies using different methods to ensure the accuracy of both the UTXO data itself and the UTXOs stored on-chain. exSat provides the method of generating the data,the UTXO data sets, and exSat image for anyone to download and verify the data. During this process, we discovered that over 200 BTC had been permanently lost. Detailed analysis can be found here.
UTXO Data Generated After Block 840,000: These UTXOs are updated by smart contracts after parsing the Bitcoin blocks uploaded to exSat.
With UTXO data stored on-chain in exSat, several innovative smart contract functionalities can be unlocked, including:
Cross-chain bridge with more security and more assets.
BTC Staking & Lending without bridge.
Constructing decentralized Lightning Network channels that interact with the Lightning Network.
Combining with asset custody solutions to create cross-chain asset issuance platforms between Bitcoin and exSat, allowing assets to be issued on Bitcoin at lower costs.
exSat employs a hybrid consensus mechanism to decentralizely import Bitcoin blocks. By combining PoW and PoS, exSat ensures that the imported Bitcoin blocks are both decentralized and trustworthy.
PoW: BTC mining pools that have mined at least one block in the lastest 432 blocks (approximately 3 days) can act as Synchronizers, uploading Bitcoin blocks to exSat. Each Bitcoin block must undergo validation in smart contracts, including:
Verifying if the previous block hash in the block header is correct
Verifying if the mining data is correct (by checking the nonce and difficulty)
Verifying if the transaction data in the block is complete and correct (by reconstructing the Merkle tree of transactions and verifying if the root matches the transaction tree root in the block header)
Verifying if the witness data is correct (by reconstructing the Merkle tree of witness data and checking if it matches the witness data Merkle root stored in the Coinbase)
PoS: Users who stake at least 100 BTC can become Validators and participate in voting on the hash of new blocks. The network is only activated when there are at least 21 Validators. For a Bitcoin block, a hash is only recognized as valid if over 2/3 of Validators vote for the same hash.
Independent Operations of Synchronizers and Validators: Synchronizers and Validators work independently. A Bitcoin block’s data is considered to have reached consensus only when the hash uploaded by the Synchronizer matches the hash agreed upon by the Validators. Only blocks that have reached consensus and are irreversible (i.e., has at least 6 confirmations) will be parsed to update the immutable UTXO database. However, to provide flexibility to DApps, exSat also offers access to UTXO data that hasn't yet reached irreversibility.
The entire Data Consensus Protocol is executed within exSat’s smart contracts, ensuring that all operations are decentralized and trustworthy. This results in two key outcomes:
The UTXO data is reliable and trustworthy.
When DApps parse Bitcoin transactions within the smart contracts, the parsed results are also trustworthy.
This establishes a solid data trust for extending Bitcoin through DApps. As long as the DApp’s smart contract code is sound and reliable, any data derived from processing Bitcoin's raw data on exSat is also trustworthy. This provides a data-level trust layer for expanding Bitcoin’s use cases. For example, if a DApp is handling Bitcoin asset protocols like Runes, the assets recorded in the DApp's contract are considered trustworthy. This allows for the decentralized asset index to be seamlessly created through exSat’s Data Consensus Protocol.
The Data Consensus Protocol builds a trusted data basis for extending Bitcoin, while decentralized custody provides a bridge for managing Bitcoin assets. Together, they provide the necessary infrastructure for developing Bitcoin-based DApps in a fast, easy, and reliable manner.
Decentralized asset custody is not a cross-chain bridge, but a decentralized method to help users or DApps hold and manage their on-chain assets. The ideal form of decentralized asset custody would use smart contracts to manage assets based on rules in the code. However, since smart contracts can only manage assets on the chain they exist on, they don't hold private key for signing transactions to operate assets on other chains. In the context of extending Bitcoin (such as Bitcoin L2), it is essential to support sending Bitcoin transactions from Bitcoin L2, such as performing a withdrawal operation on a cross-chain bridge. Therefore, smart contracts alone cannot manage Bitcoin assets.
The most feasible solution for now is decentralized asset custody. Custodians are qualified Validators who use MPC (Multi-Party Computation) technology to perform multi-signature operations for managing assets.
The asset custody service can be made available for everyone, including DApps and other BTC L2s, creating a universal decentralized asset custody solution. This unlocks a wide range of new and valuable use cases. You could even build your own cross-chain bridge easily.
Since exSat reliably maps all elements of Bitcoin into its RAM and provides a universal asset custody service across both Bitcoin and exSat, developers can leverage new approaches to build Bitcoin DApps, e.g. , the dapp could have different logic layers to achieve different targets.
Assets & Liquidity layer can be built directly on Bitcoin, locking BTC using various scripts such as HTLC, DLC, or multi-signature scripts. Bitcoin’s security ensures the safety of funds and provides a trusted foundation.
Application Logic layer can handle complex dapp logic. The exSat native layer allows for smart contracts to be written in C++, while the EVM layer supports Solidity smart contracts. With instant finality (1 second irreversibility) and high TPS, and the Bitcoin's complete data, this layer can execute various complex and high-performance business logic.
User Interface layer can be developed using EVM, which's familiar to many developers, facilitating user interaction, dApp integration, and cross-chain operations. This makes it easier to interface with all the ecosystem.
As the docking layer of extending Bitcoin, exSat extracts trust and assets from Bitcoin and distributes them across the whole Bitcoin ecosystem, serves as a critical infrastructure for Bitcoin’s ongoing mass adoption.
