Botanix Labs recently proposed a new sidechain design called spiderchains to enable the Ethereum Virtual Machine to run on the Bitcoin network. This design deviates from previous proposals in several ways. Firstly, it does not involve miners directly in consensus or merge-mining. Instead, it utilizes multisig and escrow bonds to create a second layer proof-of-stake system on top of Bitcoin. Secondly, it does not require any changes to the Bitcoin network.
It’s important to note that the spiderchain itself is not the sidechain. Rather, it acts as a collateral layer that facilitates the custody of users’ funds and stakers’ bonds on the mainchain. The sidechain blocks are produced independently by stakers, referred to as orchestrators in the paper. The spiderchain sits “above” the sidechain, which sits above the base layer on the mainchain.
To understand how the system works, let’s delve into how the Botanix EVM chain interacts with the spiderchain layer. The Bitcoin blockchain is used to select a block constructor for the proof-of-stake system. Instead of relying on energy-intensive randomization like proof-of-work, proof-of-stake systems use a Verifiable Random Function (VRF) for selection. In the case of spiderchains, Bitcoin blockhashes are used to generate verifiable randomness.
The spiderchain also utilizes the VRF to select a random subset of stakers for constructing a multisig address for deposits into the sidechain with every Bitcoin block. Each deposit or change from transactions pegging out of the sidechain is assigned a unique address depending on the mainchain block, formed by a random subset of stakers. This approach helps mitigate the risk of funds from malicious actors and reduces the impact of key loss or malicious behavior on the entire sidechain.
Additionally, the spiderchain’s withdrawal mechanism follows a First In First Out (FIFO) approach. This means that withdrawals from the sidechain are processed using the most recently deposited UTXOs. This design ensures that funds deposited before malicious entities become the majority of stakers are safe and isolated from them until withdrawal requirements necessitate spending those funds.
In terms of the proof-of-stake system’s bonds, stakers are required to deposit a bond into a multisig address composed of a random set of existing stakers. This collateral acts as a penalty for malicious behavior, and stakers can be penalized, or even removed from the set, if they fail to respond or engage in misconduct. Slashing, the penalty process, is a combination of programmatic and social actions initiated by the keyholders of a staking bond.
The use of spiderchains as a sidechain design offers a unique approach to porting the Ethereum Virtual Machine to the Bitcoin network. By utilizing multisig and escrow bonds, verifiable randomness, and a carefully designed withdrawal mechanism, Botanix Labs aims to enhance the security and scalability of sidechain solutions. This proposal provides an intriguing alternative to traditional sidechain architectures and deserves further exploration in the blockchain community.
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About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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