How to allow thousands of nodes to multi-sign BTC and re-stake to reshape the future of L2 upstream

If the main lines of the first two cycles were DeFi and NFT, then the keyword of the current cycle is undoubtedly Bitcoin Layer 2.

As the price of Bitcoin broke through the $69,000 mark, setting a new all-time high, the Inscription Track entered a new round of cooling-off period. During this period, the community began to realize that the Bitcoin ecosystem still lacked richer and advanced infrastructure. In order to meet the growing demand, the Bitcoin ecosystem has begun to move towards a more "out of virtuality and into reality" development path, including Bitcoin Layer 2, Bitcoin DeFi and Bitcoin cross-chain technology, which together constitute the BTCFi ecosystem. In these areas, Bitcoin Layer 2 arguably plays the most important role.

Currently, competition in the Bitcoin Layer 2 field is becoming increasingly fierce, and there are no less than fifty projects on the market. The competition among projects in total value locked (TVL), the superposition of concepts, and even the fifty-fold increase in one day have made Bitcoin Layer 2 one of the hottest areas at the moment. For the Merlin chain headed by Merlin, the current TVL has exceeded 3.8 billion US dollars. This number far exceeds the TVL of ETH head side chains and second layers such as Polygon, Avalanche, Blast and Arbitrum.

How the Mirror protocol redefines L2 security

In this Layer 2 " In the "Gold Rush", rather than working on Bitcoin Layer 2 projects, Mirror Staking Protocol chose to sell "safety hats" on the side to provide safety protection for the new round of "gold diggers".

Since there are many open source versions, it is easy to implement and has the lowest implementation cost, so the solution currently adopted by most Bitcoin Layer 2 is to combine multi-signature ) and the Ethereum Virtual Machine (EVM), whether it is a multi-signature scheme using multi-party computation (MPC), a threshold signature scheme, a Hash Lock, or a discrete logarithm contract (DLC), the core is around multi-signature and EVM expansion. This method allows users to cross-chain Bitcoin to a multi-signature address, generating new Bitcoin tokens on the EVM chain, making it compatible with the functionality of EVM smart contracts.

In order to do business in this round of Bitcoin ecosystem, many Bitcoin Layer 2 projects are not willing to discuss the security issues of Bitcoin Layer 2 pledge funds, and even Deliberately conceal your own safety risks. But in fact, Bitcoin Layer 2 security is a crucial topic. For the Bitcoin Layer 2 project itself, security can be said to be the key to the project’s survival. For users, the security of Bitcoin Layer 2 projects is directly related to the security and liquidity risks of their pledged assets. Any security breach may lead to significant financial losses.

In this context, Mirror Staking Protocol (Mirror Protocol for short) has redefined Layer 2 security with its unique security solution.

Mirror Protocol is a truly decentralized and trustless Bitcoin staking protocol. The protocol provides a truly decentralized and secure Bitcoin staking solution for numerous BTC Layer 2 projects. The test network has been deployed and is about to enter the public beta stage. Audited by SlowMist and Certik.

Currently, the Mirror Protocol has been branded as Mirror Staking Protocol, hoping to focus more on providing a truly decentralized and secure BTC staking solution for BTC Layer 2 projects. Solution Mirror L2, this protocol has attracted widespread attention from the community and sparked heated discussions on social media by implementing a truly decentralized and trustless Bitcoin staking mechanism.

Overlapping multi-signature groups (MSG) algorithm

The core innovation of the Mirror protocol is the overlapping multi-signature group (MSG) algorithm, which is also the way it ensures the security of Bitcoin Layer 2 projects.

This algorithm is based on the top paper " Decentralized Asset Custody Scheme with Security against Rational Adversary ", translated into Chinese as "Decentralized Asset Custody Scheme with Security against Rational Adversary", this paper has been published by the famous network and Proceedings from the Internet Economy (WINE) conference.

The paper proposes a decentralized asset custody framework that can safely manage customer assets held by a large number of custodians, totaling several times the margin. The framework reduces management costs and increases activity by allocating custodians and assets into multiple custodial groups, with each group having full control over a small portion of the assigned assets. Certification of each hosting group requires the consent of a sufficient number of group members, which can be achieved through voting or threshold signatures. Under this framework, transactions can be processed more efficiently within a very small number of group members because computational and communication costs are significantly reduced. Liveness and robustness are also improved, as even a single active escrow group can process transactions. For more details, please see the original text .

In terms of specific implementation, Mirror groups nodes at the Multi-Signature Groups level. Each group consists of any 5 nodes, and 3 of these 5 nodes can control the entry and exit of assets through multi-signatures. Each node is also required to stake 1 mBTC as a penalty for malfeasance.

For Overlapping Groups overlapping groups , each node can be grouped with any other 4 nodes to form an overlapping group. If there are 1000 nodes, it can produce 10,000 groups. If the TVL is 10,000 BTC, each group can be allocated 1 BTC. 3 nodes must do evil to take away 1 BTC, but the cost of their illegal behavior is the 3 mBTC they staked, ensuring safety.

This unique design of the Mirror protocol is not only suitable for cross-chain asset mapping , such as the mapping of Bitcoin to Ethereum, can also effectively reduce the capital cost of custody services, and ensure that even in the case of partial corruption of the custodian, a large amount of customer assets that exceed the margin can be protected through the rational opponent model.

Through its innovative algorithm and rigorous design, the Mirror protocol provides a new staking and security mechanism for Bitcoin Layer 2 projects. This not only helps expand the pledged assets of Bitcoin Layer 2 projects to hundreds or thousands of nodes for joint custody, but also strikes a balance between Bitcoin pledge rate, security and decentralization.

In addition, the algorithm practice of the Mirror protocol also embodies the concept of modular blockchain design, by generating mBTC anchored 1:1 with Bitcoin. Compatible with EVM. This mechanism also supports restaking, allowing users to re-stake mBTC on mainstream EVM DApps, further enhancing its application potential in the decentralized finance (DeFi) ecosystem.

Financing and team background

Able to implement new asset custody algorithm solutions, Mirror protocol team The background is also one of the important guarantees for its success.

The team is composed of elites from top institutions and companies such as Microsoft, Google, MIT, Yao Class of Tsinghua University, Samsung, Hyundai, Conflux, Decus, etc. . The top paper authors mentioned in the previous article, namely Ph.D Zhaohua Chen who graduated from Peking University and Guang Yang from Conflux, their research results were recognized by the Network and Internet Economy (WINE) conference, demonstrating the team’s progress in the blockchain Deep strength in blockchain technology and security. After WINE included the paper, the official account of Peking University Computing Frontier Center (CFCS) also posted a message to express its congratulations.

In terms of financing background, although the specific amount is temporarily It was not disclosed, but the Mirror Protocol’s seed round received investment from UTXO (the investment arm of BTC Magazine), Conflux, and IMO Ventures. It is worth mentioning that Bitcoin Magazine, founded in 2012, can be said to be one of the oldest and most mature sources of information focusing on Bitcoin. It has also done a lot of research on Bitcoin Layer 2. Some time ago, they conducted research on Bitcoin Layer 2. The definition of 2 has generated considerable discussion.

Related reading: " The chaos of Bitcoin Layer 2 is actually a good thing "

Decentralized node multi-signature

How to elect nodes?

As part of the overlapping multi-signature group (MSG) algorithm design, the Mirror protocol introduces a more decentralized and decentralized node election process and strategy.

The process of node election is as follows:

1. Officially announce your participation in the Mirror protocol node election on Twitter, and the node election committee and the Mirror team will Confirm node candidates.

2. During the voting period, community members can vote under Mirror’s Twitter account. The top 100 nodes with the most votes will be automatically elected. Once elected, the technical team will help set up the nodes.

In this way, Mirror is able to generate hundreds of nodes and grant them the subscription rights for MIRR tokens, allowing users to choose who becomes MIRROR’s node investors . Nodes will receive subscription rights of up to $120,000. The project now involves 300 to 500 influential node investors elected by users. Whether it is an individual KOL, an institution, a media entity or a project, anyone can become a node investor.

The more nodes, the more mortgage The lower the rate

The node election process of Mirror Staking Protocol is divided into four rounds, gradually increasing the number of nodes, which are 100, 300, 600 and 1000 respectively. 100 nodes will be selected in the first round of elections.

To ensure security, nodes must stake at least 1 mBTC to the Mirror Staking Protocol and act as decentralized custodians for 12 months. The winner of the node election will receive a special reward, namely a call option of 1 million MIRR (Mirror’s governance token) at an exercise price of $0.12. For nodes elected after the first place, the call options they receive will be based on the provisions in the table below. The exercise price for the first round is also set at $0.12. In subsequent rounds, the exercise price will be gradually adjusted based on the market price. The above is the relevant information about the Mirror Staking Protocol node election process and the responsibilities and rights of the elected nodes.

As of the time of writing, according to the latest official announcement, since the node election was launched on March 5, 2024, the Mirror Staking Protocol has been , attracted more than 200 KOLs and more than 50 project organizations to participate in the election on social media such as X. At the same time, more than 50,000 users have participated in voting in this election, with the total number of votes exceeding 3 million.

Roadmap and Token Economics

In March 2024, the test network of Mirror Staking Protocol will be launched, using overlapping multi-signature groups to bridge the mortgaged BTC L1 assets to the EVM POS network , and generate EVM-compatible mBTC. At the same time, the first round of elections for 100 nodes will be completed by March 2024.

Mirror Staking Protocol mainnet will be launched in May 2024, allowing for staking and bridging of BTC L1 assets to the BTC Layer 2 network. Partner with other BTC Layer 2 projects to provide them with truly decentralized and secure Bitcoin staking services. Build TVL and ecosystem together with other BTC Layer 2, and carry out "one mortgage, double income" activities.

Continue to expand the ecosystem application of mBTC on BTC Layer 2, launch the ecosystem fund, and support various builders and developers to jointly build BTC with BTC Layer 2 Ecosystem and realize the re-hypothecation of mBTC.

In terms of token economics, MIRR is the governance token of the Mirror Staking Protocol. The total supply of MIRR governance tokens is 1 billion.

24% for nodes: there are four election rounds (100, 300, 600 and 1000 nodes). In the first round there are 100 nodes. The subscription rights for each node are detailed in Table 1 and have an exercise price of $0.12. Tokens will be distributed over 12 months. The top-ranked node will receive 1 million subscription rights, and this allocation will decrease in order to the 20th-ranked node, as shown in Table 1.

26% for users: users receive airdrop subscription rights; distributed over 10 quarters, with 10 million released in the first quarter. The strike price is also $0.12. Tokens will also be distributed over a 12-month period. User allocation is based on user points, including the TVL of BTC mortgage and the ratio of inviting friends. Each user is assigned a unique invitation code, and directly invited friends count as 50% of their TVL and secondary friends as 20% of their TVL.

In addition, 14% use For investors: Seed round investors will unlock within 12 months, and institutional round investors will unlock within 24 months. 18% for project teams and consultants: this allocation is unlocked over four years and allocated monthly. 6% for Foundation Finance: This allocation is unlocked over four years and distributed monthly. 12% for Layer 2 Ecosystem Development Reserve: This allocation is unlocked over four years and allocated monthly.

Summary

How to reshape the staking of hundreds of nodes to multi-sign BTC In the future of Bitcoin Layer 2 upstream, the solution of the Mirror protocol is the innovative overlapping multi-signature group (MSG) algorithm and decentralized node multi-signature.

Through its carefully designed overlapping multi-signature group (MSG) algorithm and decentralized node multi-signature mechanism, the Mirror protocol has successfully opened up the Bitcoin staking track It breaks new ground and lays a solid foundation for the future of Layer 2 upstream. This innovation not only enhances security, but also increases the degree of decentralization and solves key issues in the asset pledge process, thereby providing solid support for the widespread application and development of Bitcoin Layer 2 projects.

It can be said that Mirror is the upstream supplier of layer2 projects, providing a truly decentralized and secure BTC staking solution for BTC Layer 2 projects. If the BTC Layer 2 project is an electric vehicle manufacturer, the Mirror Protocol is a battery pack supplier; if the BTC Layer 2 project is large-scale language models (LLMs), the Mirror Protocol is a GPU cloud computing center.

From a longer-term perspective, Mirror not only further opens the door to DeFi for the Bitcoin ecosystem, but also opens up the ceiling and upstream future of the Bitcoin staking track. The modular and scalable design of the Mirror protocol also means that it is not limited to Bitcoin, and its underlying principles and technical framework can be applied to cross-chain operations and staking security of other blockchain assets, enhancing the interoperability between different blockchain ecosystems. The interoperability also creates more new usage scenarios.