BTC Rollup: Scaling Bitcoin Through Layer 2 Solutions

BTC Rollups, introduced in March 2023 and discussed by prominent Bitcoin maximalist Jameson Lopp, represent a scaling solution for blockchain networks like Bitcoin, operating at the first layer (Layer 1).

In the context of OpenBRC, transactions are brought off-chain using the Open protocol, processed there (usually on Layer 2), then bundled into batches before being sent back to the first-layer blockchain. Smart contracts validate these batch transactions and update the blockchain's state.

The technical implementation of OpenBRC increases transaction throughput while reducing transaction costs. This is because aggregation means the blockchain doesn't need to handle individual transactions separately but can process them as a single unit, technically requiring only one processing step.

This is particularly beneficial for decentralized applications (dApps) that rely on frequent and fast transactions for efficient operation. This is why aggregation is considered a viable scaling solution for blockchains like Bitcoin.

There are two main BTC Rollup approaches:

1. Optimistic Rollup:

   • Users can challenge the committed state on the main chain through a dispute resolution mechanism.

   • Rollup operators, who aggregate multiple transactions into a single rollup block, essentially submit a summary of the block to a verification game on the main blockchain.

   • In the verification game, any user can challenge the summary by submitting evidence of an incorrect summary, known as a fraud proof.

   • If the proof is valid, the committed state is reverted, and the rollup contract returns to its previous state. If no one challenges the summary, the rollup block is considered finalized and maintains the committed state.

   • Optimistic rollups assume the submitted state is correct until proven otherwise.

2. BTC ZK-Rollup (Zero-Knowledge Rollup):

   • ZK-Rollups (also called validity rollups) use zero-knowledge proofs to determine the correctness of the rollup contract.

   • Zero-knowledge proofs allow verifiers and provers to ascertain the truth of a piece of information without revealing the specific information itself. This enables rollups to verify the correctness of aggregated off-chain transactions without disclosing sensitive information about the batch.

   • ZK-Rollup operators responsible for bundling transactions generate validity proofs for each batch of offline transactions they process.

   • These validity proofs are then submitted to the first-layer blockchain to demonstrate that the state update is indeed correct. Unlike optimistic rollups, no dispute resolution mechanism is needed.

It is indicated that OpenBRC will adopt the ZK-Rollup approach as its primary solution.