BTC, Solana, and Restaking

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24 Jun 2024
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I recently read an article in one of my favorite WeChat public accounts, "Orange Book," titled "Crypto Impotence."


"A dreadful boredom is spreading through the crypto world, like the plague. No one knows where it started, but before you know it, this disease is everywhere."

Indeed, the recent tech scene has been devoid of noteworthy innovations. The only topics generating buzz are meme-related ones like Pepe, Trump, and Jenner. The last significant tech-focused hype might have been the "Pandora" duality of Picture Coins.

The primary market is similarly affected. While we haven't seen any groundbreaking "0 to 1" innovations, the "1 to 10" progress in various fields is still happening.

Our previous report focused on new perspectives across different layers of the ETH modular narrative. This time, let's look at the "1 to 10" advancements in the BTC, Solana, and Restaking fields.

1. BTC

Many people anticipated that Rune would create a lot of excitement, but it didn't. If BRC20 or Ordi were a pleasant surprise, Runes was a meticulously prepared ceremony waiting for the right moment. However, as the saying goes, "Great heat must die," at least in the short term. Long-term, protocols like Runes, Atomical, RGB & RGB++ are expected to revitalize BTC asset issuance. The BRC20 upgrade two months ago also aimed for greater functionality, making native stablecoins based on BRC20 much easier to implement.

The most noteworthy developments in the BTC ecosystem over the past two months, apart from the UTXO Stack I previously mentioned, are the projects Unisat, Fractal, Arch Network, and Quarry.

  • Fractal: It's essentially a 100% BTC fork but with block times reduced to 30 seconds. While some might dismiss it as a mere testnet, its significance lies in its stability and speed compared to BTC testnets, combined mining with the BTC mainnet, and seamless migration of assets and infrastructure from BTC. It also allows for faster implementation of controversial OP_CODES like OP_CAT and native ZK verifications, potentially enabling inscription-based contracts.
  • Arch: Unlike typical BTC EVM L2/sidechains, Arch introduces programmability to BTC through a ZKVM with a decentralized prover, functioning like a Layer 1.5. Transactions are triggered by L1 and executed within Arch's ZKVM, which then broadcasts the results back to the BTC mainnet.
  • Quarry: This infrastructure facilitates combined mining with BTC, allowing quick launch of POW chains secured by BTC miners' hashrate. It resembles EigenLayer's AVS rewards but targets miner hashpower security rather than POS holders.


2. Solana

Solana has recently been exploring the concept of modularity, a departure from its traditional monolithic chain approach. Projects like MagicBlock, Sonic, Solforge, and Mantis are pioneering this shift.

  • MagicBlock: This project focuses on ephemeral rollups, akin to "use and delete" concepts. Initially proposed by AltLayer, MagicBlock aims to be a solution for Solana's full-chain gaming engine.
  • Sonic: This gaming appchain leverages the HyperGrid Framework, facilitating easy deployment of SVM appchains, similar to how XAI functions on Arb.
  • Solforge: A general-purpose appchain stack, positioning itself as the SVM version of OP Stack or Arbitrum Orbit.
  • Mantis: An SVM rollup acting as an intent settlement layer, not limited to the Solana ecosystem, supporting both Solana and EVM-related orderbook flows.

Key points of interest:

  1. Despite Solana's high performance, single games can significantly impact chain capacity, prompting a move towards modularity.
  2. Solana's founder has shown a more neutral stance towards modularity this year.
  3. Many within the Solana Foundation and developers support the move towards modularity.
  4. Notable figures like Multicoin's Kyle still oppose this concept.

The next 6-12 months will be interesting for Solana's infrastructure, particularly with the anticipated release of FireDancer, which promises significant improvements in TPS and stability.

3. Restaking

Restaking has been the hottest field in the past six months. However, there's confusion about the differences between the two leading projects: Babylon and EigenLayer.

  • EigenLayer: Known for its smart contract capabilities, EigenLayer supports complex slashing mechanisms, exemplified by AVS EigenDA. However, it lacks the unique features of Babylon, such as EOTS and BTC timestamp protocols, enabling native BTC restaking.
  • Babylon: Focusing on native BTC restaking, Babylon's strengths lie in preventing long-range attacks and kickstarting POS security consensus through BTC timestamps. More complex applications require "expansion packs" like Chakra or SatLayer, which add smart contract capabilities to Babylon.

To summarize, Babylon + Chakra/SatLayer = EigenLayer in functionality. Babylon projects like Solv Protocol and Lorenzo mirror EtherFi and Renzo in the LRT ecosystem. EigenLayer's expanding stack includes projects like Ethos for AVS coordination and Aethos for programmable policy layers, making it increasingly similar to AWS for blockchain.

Interestingly, despite widespread VC interest, the most challenging field for investments is Ton, noted for its higher investment difficulty compared to ETH or Solana.
In the next report, I might cover Ton if there's an opportunity.

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