Empowering Bitcoin zkBridge with EigenLayer Restaking and Dual Staking

At Polyhedra Network, our zkBridge marks a significant leap forward in blockchain technology, providing a secure and decentralized solution for the transmission of messages and bridging of assets across various Layer 1 and Layer 2 networks. We ensure trustless and reliable verification of state transitions from source to destination chains, eliminating the need for third-party security protocols. Central to our security model is the integration of zero-knowledge proofs, which offer robust security that is not dependent on external factors and significantly reduce the complexities and costs associated with on-chain verifications. These proofs allow the verification of data without revealing the data itself, ensuring privacy and security. Our zkBridge operates on a dedicated decentralized network for proof generation, encouraging participation from various nodes in the ecosystem. These nodes are crucial in relaying block headers and generating proofs, and as a reward for their contributions and successful execution, they receive incentives, fostering a collaborative and efficient network.

Polyhedra Network has previously enhanced Bitcoin interoperability with our zkBridge Bitcoin messaging protocol. Building on this, we’re now collaborating with EigenLayer to introduce dual staking across various blockchains, leveraging our BTC bridges. EigenLayer’s dual staking mechanism utilizes native and more reliable tokens to strengthen a Proof-of-Stake network. Traditionally, Ethereum has been used as a secondary collateral due to ETH’s stability. However, we’re innovating by using BTC, the cryptocurrency with the largest market cap, for dual staking. This approach not only allows BTC holders to generate profits but also significantly benefits the entire BTC ecosystem. A major challenge has been incorporating BTC in dual staking due to Bitcoin’s limitations in supporting smart contracts. Fortunately, Polyhedra Network has addressed this issue with specialized designs in our BTC bridge, overcoming the key obstacle of message bridging with Bitcoin as the receiver chain. The integration with EigenLayer dual staking and AVS will be officially launched after EigenLayer AVS mainnet launch.

Details on Bitcoin bridges especially when Bitcoin network is the receiver chain

Polyhedra Network’s approach to using Bitcoin as a receiver chain in cross-chain transactions addresses a key challenge: Bitcoin’s lack of native smart contract functionality. This limitation prevents Bitcoin from being a standard receiver in our zkBridge framework. For illustration, we’ll use Ethereum as the sender chain and Bitcoin as the receiver.

To secure these transactions, we’ve implemented a Proof of Stake (PoS)-style mechanism. Validators are required to stake native tokens (Ethereum tokens if Ethereum is the sender chain, or BNB tokens if it’s the BNB Chain) to write data on the Bitcoin network. These validators use a Multi-Party Computation (MPC) protocol to reach consensus on the messages sent. Notably, our protocol’s security doesn’t solely rely on the accuracy of the MPC protocol. In cases where the MPC protocol is compromised, users can initiate a zkBridge request to transfer the malicious message from Bitcoin to Ethereum. A slashing contract on Ethereum then assesses the message’s validity and, if necessary, slashes the stakes of the MPC committee members, with a portion of these stakes compensating the user.

Our detailed scheme includes:

1. Staking on Ethereum: Validators deposit tokens as collateral.
2. Fraud Detection and Reporting: If validators act maliciously, honest stakers or users can report this on Ethereum. Transactions from Bitcoin are relayed to Ethereum through a bridge, using a decentralized blockheader relay network. This network allows any node to transfer Bitcoin’s current block-header to Ethereum with zero-knowledge proofs.
3. Smart Contract Execution: A dedicated smart contract on Ethereum verifies the messages from Bitcoin. In case of fraud, it withdraws the dishonest staker’s deposit.

This system ensures that as long as one committee member or user remains honest on the Bitcoin network, our staking mechanism is secure, trustless, and decentralized. This staking/restaking mechanism not only enhances the utility of bitcoins but also fortifies trust and security across PoS blockchains, marking a significant step forward in decentralized finance and digital asset management.

Smart contract implementation — Slashing mechanism

The slashing and reward mechanism in our network plays a crucial role in maintaining integrity and trust. When a validator is found to be acting maliciously, the slashing protocol is triggered. Here’s how it works:

1. Validator Misconduct Detection: Users constantly monitoring the status of Bitcoin blockchain. If a discrepancy is detected, the user will initiate a zkBridge cross-chain messaging from Bitcoin to Ethereum which is natively supported by zkBridge. Such messages will carry necessary information for fraud detection.

2. Slashing Process: Once misconduct is confirmed, the Ethereum contract executes the slashing protocol. The staked tokens of the dishonest validator are partly or wholly confiscated. This serves as a strong deterrent against fraudulent activities.

3. Reward Distribution: A portion of the slashed stakes is distributed as a reward to the user or honest validator who reported the fraud. This incentivizes continuous monitoring and reporting of any suspicious activities on the network.

4. Loss compensation: Another portion of the slashed stakes is distributed to reimburse user’s losses.

Our implementation also includes several advanced features:

- Dynamic Staking Requirement: The required staking amount can be adjusted based on network conditions and historical data, optimizing the balance between security and validator accessibility.

- Timelock and Gradual Release of Stakes: To prevent sudden withdrawal and ensure network stability, staked tokens are subjected to a timelock. Even after validators exit, their stakes are released gradually over a period.

- Emergency Response Protocol: In extreme cases, such as a significant breach of the MPC protocol, an emergency response mechanism can be activated. This might involve temporary suspension of transactions.

By integrating these mechanisms, the Polyhedra Network not only enhances the functionality of Bitcoin in cross-chain transactions but also sets a new standard for security and trust in decentralized finance. Our approach demonstrates the potential of combining traditional blockchain strengths with innovative solutions to overcome their inherent limitations.

Dual staking with native tokens and Bitcoins powered by BTC bridge and Eigenlayer

In our groundbreaking approach to dual staking, Polyhedra Network collaborates with EigenLayer to integrate native tokens and Bitcoins, capitalizing on the strengths of our BTC bridge. This mechanism is akin to the conventional dual staking systems using native tokens and ETH, but it is uniquely augmented with the addition of Bitcoins as a secondary staking asset.

Dual Validation Process: A critical aspect of this system is the dual validation requirement. For any transaction to be recognized as valid on our blockchain, it must receive approval from two distinct groups: the native token operators and the BTC-backed operators. These groups must reach their respective quorums independently. A transaction that fails to meet the quorum in either group is deemed invalid. This dual validation process ensures a higher level of security and consensus, as it requires agreement from two separate and diverse sets of validators.

Role of BTC-Backed Operators: The BTC-backed operators bring a unique dimension to the staking mechanism. Their opinions and validations are securely transmitted through our BTC bridge, which acts as a reliable and secure conduit for their input. This incorporation of Bitcoin not only diversifies the staking assets but also leverages Bitcoin’s market stability and reputation, adding an extra layer of trust and robustness to the process.

Enhanced Security and Reliability: By requiring separate quorums from both native and BTC-backed operators, our dual staking mechanism significantly elevates the security and reliability of transactions. This structure minimizes the risk of unilateral decision-making or manipulation, as it necessitates a broader consensus across different asset holders.

Expanding the Staking Ecosystem: This approach also expands the staking ecosystem, inviting a broader range of participants and assets. Bitcoin holders now have a new avenue to participate in and contribute to the blockchain’s security and consensus processes, increasing the overall engagement and investment in the network.

Summary

In essence, the collaboration between Polyhedra Network and EigenLayer in dual staking, using native tokens and Bitcoins via our BTC bridge, represents an advanced step in blockchain technology. This innovative strategy not only bolsters the security and credibility of our blockchain but also opens new doors for participation and utility in the staking ecosystem, enriching the blockchain community as a whole.