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BOB Bitcoin Interoperability

Introduction​

Bitcoin users can easily onboard to the BOB Hybrid L2 without previously holding any Ethereum assets. This page explains the technology behind BOB BTC Bridge and BOB Stake: BOB Gateway is an intent-based bridge that coordinates peer-to-peer swaps between users and liquidity providers (LPs).

Cross-chain transfers are secured by verifying Bitcoin transaction proofs with an on-chain light client, avoiding the need for an oracle. Optional intents, such as staking, lending, and swapping tokens can all be accomplished while only requiring a single Bitcoin transaction from the user.

Bridge or Stake BTC on BOB​

Gateway powers the BOB BTC Bridge and BOB Stake.

Bridge or Stake BTC on BOB

Check our user guides to learn how to swap your BTC to wrapped BTC or staked BTC.

Gateway for Builders​

We are interested in working closely with builders looking to connect their smart contracts as new strategies for BOB Gateway users.

These are some of the features we're working on for Gateway's next upgrade, with new ideas being added frequently.

  • "Unwrap" your wrapped BTC on BOB by withdrawing back to BTC on Bitcoin mainnet
  • "Unstake" your BTC LST/LRT back to BTC on Bitcoin mainnet
  • Swapping from BTC to any ERC20 through a DEX (already possible, not fully implemented yet)
Integrate BOB Gateway Into your App

See our Builder Guide to learn more about our SDK and extending BOB Gateway's functionality to bring Bitcoiners one transaction away from your use-case.

How Gateway Works​

  1. Liquidity providers (LPs) temporarily lock wrapped Bitcoin (WBTC or tBTC) in escrow smart contracts on BOB.
  2. A user makes a request to the off-chain relayer to reserve some of the available liquidity.
  3. The user sends BTC to the liquidity provider's Bitcoin address. A hash of the user's order is included in the OP_RETURN of their transaction, including data such as the recipient's EVM address on BOB and their desired strategy (i.e. their intent).
  4. The relayer submits a Merkle proof of the user's Bitcoin transaction to an on-chain Light Client, granting the relayer permission to withdraw the LP's wrapped Bitcoin. Encoding the user's order in their Bitcoin transaction makes it possible to trustlessly verify and complete the user's intent without using an oracle.
  5. Gateway sends the LP's wrapped Bitcoin to the user's EVM address. If the user requested a Bitcoin LST/LRT, that token is minted using the LP's wrapped Bitcoin before it is sent to the user.

Architecture​

architecture

User Flow​

  1. A user requests to swap BTC for wrapped BTC (e.g. WBTC, tBTC, or FBTC) or staked BTC (e.g. SolvBTC.BBN, uniBTC).
  2. The user gets a "quote" of which Gateway smart contract is an available route (i.e. which LP they can swap with).
  3. The user creates an "order" with the relayer to reserve the LP's liquidity.
  4. The user creates a Bitcoin transaction, updating the order with their txid. Gateway's SDK creates a hash of the user's intent, which is included in the OP_RETURN of the transaction. This hash includes metadata such as the user's EVM address, which strategy they are using (i.e. their intent), and how many sats to convert to ETH for gas, among other data. By including a deterministic hash of the user's order, we lay the groundwork for making Gateway trustless in the future by decentralizing the relayer set.
  5. The relayer monitors the Bitcoin chain and sends the LP's wrapped BTC to the user after the txid is seen on Bitcoin. Specifically, the relayer submits a Merkle proof of the user's Bitcoin tx to an on-chain light client for trustless verification of the user's intent. It accomplishes this by requiring that the recipient's EVM address, sequence of smart contract calls, and other order data exactly match the hash in the OP_RETURN of the user's Bitcoin transaction.

Liquidity Provider (LP) Flow​

  1. An LP asks the relayer to deploy a new Gateway contract, which functions as an escrow for their funds. This is permissioned at the moment because BOB pays the transaction's gas. See the Trust Assumptions section below for more information.
  2. The LP deposits wrapped Bitcoin (e.g. WBTC, tBTC, FBTC) in their Gateway contract.
  3. The LP can only withdraw their funds or update their swap fees after a delay so that the relayer has time to finish open orders. The relayer will not accept new orders during this delay until reset.

Adoption and Fees​

You can find the current liquidity, LPs, and usage of Gateway on the BOB Gateway Dune dashboard.

LPs can configure fees. Currently, most LPs use the following fee structure:

  • less than 0.01 BTC: 20 bps
  • 0.01 - 0.1 BTC: 10 bps
  • 0.1 - 1 BTC: 7.5 bps
  • more than 1 BTC: 5 bps

Frontends can also charge additional fees on top. The BOB bridge and staking page apply a 0% fee on top of the LP fee. By default, LPs are chosen based on available liquidity and the lowest fee.

For an up-to-date info on fees, please see the quotes provided on the BOB bridge and staking pages or use the SDK if you are a builder.

Trust Assumptions​

While development for BOB Gateway is advancing rapidly, there are still some training wheels in place that introduce additional trust assumptions to the architecture. These are going to be addressed and replaced with trustless or trust-minimized equivalents as the product matures.

  • Liquidity providers (LPs) receive BTC directly from users on Bitcoin mainnet. As a result, the off-chain relayer cannot interfere with funds received by the LPs.
  • The relayer is currently necessary to complete the user's intent (e.g. by submitting a Merkle proof of the BTC transaction to the on-chain light client, unlocking the LP's wrapped BTC). Since users cannot submit the proofs themselves yet, user funds are "stuck" whenever the relayer is offline. Users will be able to submit their own BTC proofs after we transition Gateway use a full Bitcoin light client and add functionality to protect LPs from potentially malicious strategy contracts.
  • Another reason that Gateway does not currently accept proof submissions directly from users is to prevent "liquidity sniping." If there were no relayer (i.e. users could reserve liquidity directly from the Gateway LPs for free before the user sends their BTC), it would be possible to reserve all available liquidity, blocking Gateway's operation.
  • At the moment there is only one relayer. In addition to its other functionality, this relayer pays gas on the user's behalf so that the user doesn't need to make a transaction on BOB to complete the bridging process. Since a malicious actor could create a strategy designed to take advantage of the relayer (e.g. spend all of the funds available for gas fees), the process of adding new strategies to Gateway as well as decentralizing the relayer role are restricted by the BOB team until Gateway is upgraded as described above.

Security of the Light Client​

Gateway currently uses a "light" Bitcoin light client, which only checks that the submitted Bitcoin block headers meet the current or previous difficulty target. Later, we will transition to a "full" Bitcoin light client and submit every Bitcoin block header to the relay.

The following calculation shows that it would take ~$12,000,000 of hashrate (excluding the opportunity cost of not mining) to attack the relay at the time of this writing in December, 2024.

Let's review the calculation given in the Bitcoin Wiki to compute the hashrate:

hashrate = difficulty * 2**32 / 600 (60 * 10 = 10 minutes)
hashrate = ~157 (GH/s) = (22012.4941572 * 2**32 / 600) / 10**9 (example)
hashrate = ~743 (EH/s) = (103919634711492.2 * 2**32 / 600) / 10**18 (time of writing, Dec 2024)

The LightRelay requires that the proof is included at the current or previous difficulty so we can assume the attacker has 2016 * 2 blocks to brute-force a valid chain of proofLength. This is possible since, due to SPV assumptions, we can not verify the transactions references by the block header are valid, only that sufficient PoW has accumulated on the chain.

Let's assume the attacker can generate 6 blocks (with some invalid transactions) within two difficulty adjustment period, 2016 * 2 blocks (four weeks).

hashrate * 6/(2016*2)
743 (EH/s) * 6/(2016*2) = 1.105 EH/s (~1,105,654 TH/s)

So we need ~0.142% of the current hashrate to build six blocks in two weeks.

If we estimate it would cost $11 per TH/s (excluding electricity and other setup costs) then the total cost of that hashrate would be $12,162,194. This excludes the opportunity cost from actually mining on Bitcoin mainnet, receiving fees and block rewards.

Therefore, given that the value protected by the relay is less than $12m, protocols secured by the relay are "economically safe".