Introducing EAST Account Vault Model (AVM) - A decentralized, bridgeless, non-custodial way to address the Bitcoin scalability problem.
TLDR: The article discusses the challenges associated with Bitcoin, emphasizing scalability issues due to its limitations. The proposed solution (EAST AVM) involves leveraging NEAR's Chain Signature and Account Aggregation, allowing smart contract functionalities for Bitcoin Assets.
The hard things about Bitcoin
Bitcoin has been an interesting and controversial topic over the last year because of Ordinals. Ordinals or the “NFTs” of Bitcoin have been both an innovation and controversial topic since last year. This technology is possible because of two recent upgrades on Bitcoin: Segregated Witness (2017) separating Transaction Data and Witness Data, and Taproot (2021) increasing network capacity and batch transaction processing. Ordinals work by inscribing metadata on Witness Data into an individual Satoshi, this is known as Inscription. Since its inception, this innovation has attracted a lot of minters and traders, but also a lot of controversy from within the Bitcoin community.
So, what’s the problem with Bitcoin and Ordinals? Well, there’s one problem specific to this article, and you guessed it right, scalability. Bitcoin does not scale well, and the reasons are
- Bitcoin smart contract: Bitcoin is not designed for smart contracts, rather it provides a non-turing complete, stack-based, language named Bitcoin Script. Most of the programmability is achieved using PSBT (partially-signed-bitcoin-transactions), this enables users to collaborate on a transaction, e.g. marketplace listing and buying.
- High Transaction Fees: Bitcoin’s average gas fee peaked at 37 USD transaction in December, 2023, the year Ordinals launched. Ordinals minting creates a high number of transactions, that leads to network congestion, slowed transactions, and higher fees.
Why do we need to solve this? Why not just leave Bitcoin as it is as a store of value? The answer lies with the influx of capital from BTC and the demands for Bitcoin blockspace, especially Ordinals that catalyzes Bitcoin’s consumption over the past year.
A new programmability layer for Bitcoin
The NEAR ecosystem is not just a blockchain, but consists of the layer one blockchain that could scale to 1B+ users, security aggregation stack like NEAR DA, decentralized frontends that provide multiple apps from many chains, and many more. In March 2024, NEAR will release Chain Signatures and Account Aggregation that enables multi-chain even further.
Figure 1 Chain Abstraction with Account Aggregation
Now here’s where NEAR’s Chain Signature and Account Aggregation will be the winner. Chain signatures produce signatures that are signed by Secure Multi-Party Computation (MPC) without revealing their private keys. Account Aggregation is a new feature that allows a NEAR account to control multiple addresses from different chains. This makes it possible for a single NEAR account to sign transactions to any other chain, including Bitcoin.
At EAST Blue, we are building our stack on top of NEAR, leveraging the whole ecosystem like the L1 for smart contracts and Chain Signature / Account Aggregation to address Bitcoin scalability problems.
Figure 2 EAST Blue Account Vault Model (AVM)
The Account Vault Model (AVM) is a new paradigm of cross-chain transactions. It works by transferring the ownership of an account to a smart-contract. This AVM is built on top of the NEAR account model, where an account is human-readable, permissioned through access keys, and could host a smart contract inside it. The ability to manage an account using multiple access keys enabled the transfer of an account to a smart-contract.
Since an account can create another sub-account (which could also be a smart contract), account vaults are created without inventing an entirely different protocol or smart contract. For example, a NEAR account will create a sub-account, this will act as the Account Vault, e.g. temp.alice.near. Thanks to Account Aggregation, this account will have its derived Bitcoin address (vault-1.btc), that can contain assets such as BTC or Ordinals. The ownership will then be given to a smart contract, to be handled as an asset.
The application of this approach would follow the capabilities of NEAR smart contracts. One example is an NFT marketplace that trades Account Vaults containing Ordinals. The wrapped Account Vaults can be traded, auctioned, staked, and borrowed just like ordinary NFTs. Or, imagine a BRC-20 launchpad that starts as a NEAR smart contract, and then users can unwrap their tokens as real BRC-20 assets on Bitcoin.
BTC itself could be transferred to the NEAR blockchain to be traded on DApps. A smart contract could create many Account Vaults, each acting as an individual address for a particular NEAR account. Users could then transfer BTC to this address and mint a new BTC asset on NEAR for the associated NEAR account. The newly minted BTC can be traded with other existing assets, swapped, borrowed, and so on.
Similar Solutions
Most solutions that try to solve this scaling problem are Bitcoin's Layer 2 network with Ethereum Virtual Machine (EVM) as the execution layer. Examples of this include Conflux, Bitfinity, and Botanix. Earlier projects like Rootstock (RSK) have already added smart contract features (using EVM) to Bitcoin. Stacks (STX) also provides programmability with its Clarity and the trustless two-way peg.
Our scaling solution is different by not developing a new blockchain. Instead, we integrate Bitcoin Assets into the NEAR protocol through The AVM. This way, Bitcoin assets can work just like other things on NEAR and connect with existing projects. By employing NEAR as both the settlement and execution layer for the EAST Blue infrastructure, we capitalize on NEAR's established decentralization and security. This approach stands in stark contrast to other solutions that require initializing validators or sequencers, which often results in lesser decentralization and security.
Conclusion
The proposed EAST Account Vault Model (AVM) leverages NEAR's Chain Signature and Account Aggregation to introduce a new programmability layer for Bitcoin. This solution involves creating a NEAR sub-account acting as an Account Vault, linking it to a Bitcoin address with an Ordinal. Since the Account Vault is built on top of NEAR Blockchain, our solution is fully decentralized and non-custodial without needing a centralized bridge.
One particular use case of Account Vault is to handle Bitcoin Ordinals, imagine selling, buying, offering, and auctioning your Ordinals just like any other NFT. We will discuss this in more detail later, so stay tuned!