Etch L2 plan

The Etch L2 is a bitcoin rollup.

Product.

add a mechanism to post EVM transactions to bitcoin
develop a node which tracks bitcoin L1 for these EVM transactions, and ingests them and runs an EVM L2
- re-engineer some EVM things: fixed gas allowance, direct mapping BTC address <-> EVM accounts, eliminate nonces etc., fix the gas price
build a bridge to move L1 BTC to L2 BTC (see here)
deploy a bitcoin stablecoin protocol (dai-style), bitcoin lending protocol, and a bitcoin name system protocol
reward BTC bridgers with $ETCH token, use the $ETCH token as a governance token for the stablecoin and name system. All fees go from ENS/stablecoin-lending to the ETCH stakers.

Tokenomics

BTC -> ETCH -> stETCH

Nodes earn $ETCH for bridging BTC + buying names + transacting.
Users buy domains and lend USD's using L1 BTC.
Fees (L2 BTC) from domains/lending go to ETCH stakers.

70% ETCH to LP's. 30% ETCH to Etch Foundation.

Marketing

What is the USP? ie. how do people speculate and earn 10x on an investment

buying BTC names before others - ENS shows names are valuable ($1M/year fee revenue, + largest name sale of $1.5M on secondaries - paradigm.eth)
accumulating ETCH via the bridging of BTC.

Revenue projections.

$ETCH token.
- FDV: $10M-$100M.
Bitcoin Name System.
- Fees: $1M/year (high).
$ETCH bridging.
- $1M BTC bridged. 0.03% fee.

Roadmap

bitcoin-based L3's
zk prove all of bitcoin using zerosync, sync an etch node in 1s
develop bitcoin-mev
- identify extractible value from bitcoin txs that map to L2 value sets, develop a client
celestia sequencing

Challenges

btc max tx size is 4kb. evm max tx size is 780kB
btc current DA price 7 sats/byte. evm current price ?
developing a BTC-native Metamask wallet
does bitcoin 10min blocktime permit a stablecoin design, or too much impermanent loss / market movement?

Nicolas Laurent

2024/06/23 11:14:06

celestia sequencing

What is this?

2024/06/23 11:27:13

btc current DA price 7 sats/byte. evm current price ?

4 gas for 0 bytes, 16 gas for other bytes of calldata. Fluctuates wildly depending on gas price (2-50 gwei/gas on mainnet). Blobspace pricing similarly market-driven (but non-persistent). We can charge gas fees directly on BTC if needed — it's important to remember the point of gas is to determine inclusion when demand exceeds supply for blockspace. Good question about what we do with txs that are not included — most likely design is that anything that lands on Bitcoin enters the L2 mempool, so could be executed when gas price decreases, unless it is overidden (on Ethereum node, by specifying another tx for same nonce with higher gas price, but here we could introduce a replacement/cancellation type tx very easily).

2024/06/23 11:38:30

build a bridge to move L1 BTC to L2 BTC (see here https://hackmd.io/@liamzebedee/HkB-X1oE0)

Alternative design idea: Bitcoin itself always stays on the L1. To perform an L2 tx that includes a BTC transfer, transfer the BTC on L1, guarded by a timed hashlock. Then, we need to figure out a mechanism such that (1) we can guarantee the successful execution of the tx on L2, (2) the hashlock is revealed. There are two issues here if you consider for instance a BTC <> L2asset DEX trade: (1) blockspace is not infinite, meaning the tx might not be included... the problem is not only data but also gas execution cost (2) BIGGEST ISSUE: smart contracts would need to have a Bitcoin EOA and so cannot handle BTC balances (3) If many transactions hit the DEX, slippage might be exceeded, and the transaction will fail, independently of having enough gas available — this cannot be simulated since many L2 transactions can hit the bitcoin block at the same time.

2024/06/23 11:41:00

I don't think this can be solved, so maybe it's better to restrict BTC transfer to p2p transfers, potentially mediated by smart contracts that are guaranteed to be fully simulatable for a certain safe number of Bitcoin blocks. This means no utilization of native bitcoins in smart contracts, but the possibility to use order-book type designs to buy L2 assets with bitcoin. Not even sure that works because you get into a "free option" scenario when you propose a trade then renege by not unlocking your hashlock when the market turns against you.

Etch L2 plan

Product.

Tokenomics

Marketing

Revenue projections.

Roadmap

Challenges

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