Securing Trust-minimized and fast-finality interoperability for Bitcoin and Layer-2 networks with 1.8 Billion economic security of Renzo’s LRT and ZK token dual-staking

Introduction

Polyhedra Network’s zkBridge represents a significant advancement in the blockchain industry, enabling secure and decentralized transmission of messages and bridging of assets across various Layer 1 and Layer 2 networks. Polyhedra Network’s collaboration with EigenLayer and the integration of Renzo’s Liquid Restaking Token ezETH, further enhance the capabilities and security of the zkBridge ecosystem. Powered by EigenLayer’s dual staking, the integration of zkBridge and Renzo will secure the trust-minimized interoperability for Bitcoin with 1.8 Billion crypto-economic security, including both Renzo’s liquid restaking token (LRT), and ZK token (Polyhedra Network’s native token) staking.

Trust-minimized interoperability for Bitcoin with AVS

While Bitcoin, the world’s largest cryptocurrency by market capitalization, lacks native smart contract functionality, Polyhedra Network’s zkBridge and its collaboration with EigenLayer and Renzo offer solutions to integrate Bitcoin into cross-chain ecosystems to enable other blockchains to securely write data to Bitcoin. We use EigenLayer’s dual-staking mechanism to equip the economic security to our Bitcoin AVS (i.e., Actively Validated Services), generating yields for both ZK token stakers and Renzo’s LRT, and contributing to the security of the bridge.

In our design for the Bitcoin dual-staking AVS, validators are dual-stakers with both ZK token and Renzo’s ezETH to write data on the Bitcoin network. These validators use a consensus protocol to agree on the message they are going to send. Notably, our protocol’s security doesn’t solely rely on the accuracy of the consensus protocol. In cases where the consensus 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 committee members, with a portion of these stakes compensating the user.

The integration of Bitcoin into the zkBridge ecosystem not only expands the opportunities for Bitcoin holders but also enhances the overall liquidity and stability of the cross-chain ecosystem. With the ability to seamlessly bridge Bitcoin across various Layer 1 and Layer 2 networks, Polyhedra Network’s zkBridge, in collaboration with EigenLayer and Renzo, unlocks new possibilities for decentralized finance and cross-chain interoperability, making Bitcoin an integral part of the future of blockchain technology.

Slashing mechanism for the Bitcoin AVS

The slashing and reward mechanism in our Bitcoin AVS 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 the 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 the 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 the user’s losses.

Fast Finality for Layer 2 Networks

Layer 2 networks offer high transaction throughput but pose challenges to cross-chain interoperability. To achieve fast finality for Layer-2 networks, especially for optimistic rollups such as Arbitrum, Optimism, Base and opBNB, while maintaining strong security assumptions, zkBridge introduces a fast bridging solution leveraging an “auxiliary validation network.” This network forms an external group that attests to the state of the Layer 2 network, achieving security levels comparable to the network’s native fraud proof challenges. By simulating the blockchain execution through the auxiliary validation network, strong security is achieved rapidly, significantly reducing the finality time.

Integrating zkBridge with Layer 2 Networks

zkBridge is deployed with a fast finality mechanism and decentralized auxiliary validation network for various Layer 2 networks. The integration involves two components:

1. zkBridge verifies the state proofs from the auxiliary validation network after the Layer 1 equivalent finality state on the Layer 2 network.

2. zkBridge verifies the Layer 1 consensus for the settlement of the Layer 2 network.

To reduce proof verification costs, batch proofs for multiple batches in the Layer 2 network are supported, saving gas costs on the receiver chain for zkBridge proof verification.

Dual Staking with ZK token

Polyhedra Network collaborates with EigenLayer to introduce dual staking across various blockchains, leveraging cross-chain bridges. This approach utilizes ZK token, Polyhedra Network’s native token from different networks for dual staking, allowing ZK token holders to generate profits and benefit the entire ecosystem. Polyhedra Network’s specialized designs in cross-chain bridges overcome the limitations of networks lacking smart contract support.

Integrating Renzo: The Liquid Restaking Token on EigenLayer

To further enhance the dual staking mechanism, provide a seamless user experience, and increase the crypto-economic security of the system, Polyhedra Network integrates Renzo’s ezETH, a leading Liquid Restaking Token (LRT). Renzo serves as the interface to the EigenLayer ecosystem, securing Actively Validated Services (AVSs) and offering higher yields than traditional staking. By incorporating Renzo into the zkBridge and dual staking framework, the protocol abstracts the complexity from end-users, enabling easy collaboration between users and EigenLayer node operators.

The integration of Renzo offers several key benefits:

1. Enhanced Crypto-Economic Security: Renzo’s LRT mechanism increases the crypto-economic security of the system by introducing additional incentives and penalties for validators, further deterring malicious behavior and ensuring the integrity of the network.

2. Liquid Restaking: Users can stake their assets and receive liquid tokens in return, allowing them to maintain liquidity while participating in the staking process.

3. Seamless Integration: By integrating Renzo with zkBridge and the dual staking mechanism, users can easily participate in cross-chain transactions and benefit from the security and efficiency provided by the system.

How does Polyhedra-EigenLayer-Renzo work?

1. Staking on Sender Chain: Validators deposit tokens as collateral on the sender chain.

2. Fraud Detection and Reporting: If validators act maliciously, honest stakers or users can report this on the sender chain. Malicious transactions in the receiver chain are relayed to the sender chain through a bridge, using a decentralized block header relay network with zero-knowledge proofs.

3. Smart Contract Execution: A dedicated smart contract on the sender chain verifies the messages from the receiver chain. In case of fraud, it withdraws the dishonest staker’s deposit.

4. Slashing Mechanism: When the validator misbehaves, the slashing protocol is triggered. The staked tokens of the dishonest validator are partly or wholly confiscated, serving as a deterrent against fraudulent activities.

5. Reward Distribution: A portion of the slashed stakes is distributed as a reward to the user or honest validator.

6. Loss Compensation: Another portion of the slashed stakes is distributed to reimburse user losses.

Conclusion

The integration of Polyhedra Network’s zkBridge, the dual staking mechanism and the Liquid Restaking Token powered by the EigenLayer, and Renzo, expands zkBridge’s cross-chain interoperability, security, and user experience. The combination of zero-knowledge proofs, AVS, and staking/restaking functionality, enhanced crypto economic security through Renzo’s LRT, and seamless user interaction sets a new standard for secure, efficient, and user-friendly cross-chain transactions. This approach opens new opportunities for decentralized finance and digital asset management on Bitcoin, fostering greater participation and collaboration within the blockchain ecosystem, and also generating yield for ZK token stakers.

About Polyhedra Network

The Polyhedra Network is on a mission to deliver the fastest Zero-Knowledge (ZK) Proofs to the Web3 industry, with the goal of becoming the underlying infrastructure for the entire ecosystem and the intersecting domains of Web2 and Web3. The team has designed and implemented many cutting-edge ZK protocols, forming a robust computation foundation that supports the entire blockchain world. Their flagship invention, zkBridge, is safe, fast, and does not require the trust of any third parties. To date, zkBridge has facilitated over 20 million cross-chain transactions across a network of more than 25 Layer-1 and Layer-2 blockchains, demonstrating their commitment to scalability and interoperability in Web3.

About Renzo

Renzo is the restaking hub of Eigenlayer built to streamline and expand access to the most intelligent Liquid Restaking strategies. Powered by institutional-grade node operators, Renzo abstracts away the complexities of securing Actively Validated Services (AVS), while delivering a powerful interface for risk management and rewards tracking on Eigenlayer.

With Renzo’s ezETH — the most integrated Liquid Restaking Token (LRT) — users can access broad exposure to the Eigenlayer (and Ethereum) ecosystems with more opportunities to generate rewards. Learn more: https://www.renzoprotocol.com/