Elastos, recognised for its decentralised internet framework, has maintained a deep relationship with Bitcoin since 2018 through merge mining, with its first block being minted by BTC.com and today sharing over 50% of Bitcoin’s hash power. Merge mining with Bitcoin leverages its robust and battle-tested Proof of Work infrastructure, offering unparalleled security to Elastos at a fraction of the cost. This approach not only simplifies the SmartWeb ecosystem by supporting resource-sharing but also fosters a symbiotic relationship, enhancing both security and rewards across networks. It’s Elastos’ fundamental belief that without Bitcoin’s security, no ecosystem is truly decentralised. You can learn more about Elastos’ Bitcoin-powered architecture here!
Bitcoin-secured ELA has been powering transactions across its ecosystem, from gas to staking, and it’s used yearly in its Cyber Republic DAO governance layer for election voting and as collateral for council member participants. This historical connection with Bitcoin now forms the foundation for Elastos’ new direction – leveraging its long-standing relationship to build “BeL2”, a Bitcoin interoperability solution transforming Bitcoin from a simple store of value into a fully functioning decentralised financial system.
BeL2 allows Bitcoin to remain a secure asset while interacting with the evolving decentralised finance (DeFi) landscape, empowering users to unlock the full potential of Bitcoin without relying on centralised institutions. To be the first to get updates on BeL2, turn on notifications on Elastos Twitter for announcements and join the community’s Telegram group. Here is some supporting information!
Making Bitcoin Smart with a New Bretton Woods System
Imagine if Bitcoin could talk to other blockchains, make deals, and execute contracts without ever leaving the main network. That’s BeL2. It provides a completely decentralised clearing network service for native Bitcoin DeFi, effectively making Bitcoin “smart” without altering its core protocol. This innovation allows Bitcoin to engage in complex financial operations on EVM networks like the Elastos Smart Chain (ESC) while maintaining its unparalleled security.
Since its inception in 2009, Bitcoin has grown to a market cap of over $1.3 trillion. Despite its initial limitations, emerging Bitcoin layers like meta-protocols, sidechains, and Layer 2 solutions are set to revolutionise DeFi. Interoperability across Bitcoin layers to unite innovations can unlock over $1 trillion in dormant value within the next 5-10 years, delivering a new Bitcoin-backed Bretton Woods monetary system. BeL2 is at the forefront of this transformation, positioning Bitcoin as the anchor of a new decentralised global economy, solving global debt crises and offering a “safety net” in times of instability.
BeL2 builds on this historical relationship by creating a new financial structure that allows Bitcoin to be used in complex applications without leaving its main network. Through BeL2, Bitcoin can now be part of a fully decentralised financial ecosystem, elevating it beyond a mere store of value. This empowers users with financial sovereignty, enabling them to participate in DeFi without relying on centralised institutions. Bitcoin layer interoperability today depends on third-party custodians, creating trust and security issues. Wrapped Bitcoin (WBTC) requires trust in centralised institutions to bridge assets across layers, undermining decentralisation. Trustless mechanisms are needed for true decentralisation, and BeL2 offers a solution that eliminates the need to trust human actors like custodians.
BeL2 Architecture: A Decentralised Network Clearing Service for Native Bitcoin DeFi
BeL2 addresses Bitcoin’s limitations—transaction speed, programmability, and privacy—through an innovative architecture built on Elastos’ SmartWeb technology. At its core, BeL2 operates as a decentralised network clearing service for native Bitcoin DeFi, ensuring that Bitcoin remains secure on its main chain while being used in complex financial applications.
- Locking Scripts for Enhanced Security: Locking scripts are a key component in BeL2’s architecture, allowing Bitcoin to be locked in a secure script while being used as collateral in smart contracts. This ensures that native Bitcoin stays on Layer 1 while interacting with Layer 2 dApps, preserving security and avoiding the risks of cross-chain asset transfers.
- Zero-Knowledge Proofs (ZKP): These cryptographic proofs allow the private verification of Bitcoin transactions on Layer 2, enabling smart contracts without exposing transaction details.
- Arbiters and Staking Mechanisms: Arbiters, previously referred to as relayers, are now responsible for verifying and transmitting ZKP proofs to BeL2 smart contracts and managing dispute resolution. This process is secured by a staking mechanism, ensuring that malicious behavior is punished.
- Native Bitcoin (NB) DeFi Services: BeL2 allows Bitcoin to serve as collateral for loans, enabling credit casting and decentralised transactions without needing custodians or centralised parties. This unlocks Bitcoin’s potential for lending, borrowing, and other financial activities.
Native Bitcoin DeFi to Unlock Bitcoin’s Potential
Native Bitcoin DeFi refers to Bitcoin that remains on its main network while being collateralised for Layer 2 applications, such as exchanges, loans, or stablecoin issuance. We believe all Bitcoin-related settlements must be settled on the Bitcoin mainnet for security reasons. Instead of transmitting assets across chains, messages are sent where smart contracts on Turing-complete blockchains verify and execute complex tasks and logic. This is the decentralised clearing network BeL2 provides, allowing Bitcoin lending and borrowing without middlemen or custodians. BeL2 unlocks a host of decentralised financial applications for Bitcoin holders, with a primary focus on BTC-backed loans and stablecoins:
- BTC-Backed Loans: Imagine Bitcoin holders pledging their BTC as collateral for stablecoin loans, giving layer 2 participants direct ways to earn APY with Bitcoin stakeholders.
- Native Bitcoin Stablecoin: Imagine a stablecoin backed by Bitcoin itself, allowing users to access the stability of a universal world dollar for DeFi without ever selling their Bitcoin. This combines Bitcoin’s long-term value with the practicality of a stable, everyday currency. This is a new way to experience Bitcoin, unlocking its value in layer 2 networks without selling.
- Decentralised Clearing for Financial Transactions: Bitcoin swaps and asset exchanges with EVM assets using BeL2 without intermediaries. The decentralised nature of BeL2 ensures security and privacy for users, eliminating the need to trust human actors like custodians.
By leveraging the unique strengths of Bitcoin and Elastos, BeL2 creates a decentralised financial framework where users have complete control of their assets and can access financial services without intermediaries. BeL2 sets the stage for Bitcoin to anchor a new global financial system. In a world facing economic challenges such as debt crises and financial instability, BeL2 ensures that Bitcoin can step in as a hard currency, stabilising decentralised economies while keeping its core principles intact.
Updated Roadmap for BeL2
BeL2’s development path is clearly defined, laying the groundwork for Bitcoin’s transformation into a powerful decentralized financial tool:
- 3 Months: Proof of Concept
The initial proof of concept has already demonstrated how native Bitcoin can be utilised as collateral within decentralised financial applications like loans. Early adopters have successfully borrowed against their Bitcoin without the risk of liquidation, showcasing the practical utility of BeL2. - 6 Months: Maturation of Technology & New Partnerships
As BeL2 matures, the next phase will focus on expanding its capabilities and creating partnerships to ensure widespread adoption in the blockchain ecosystem. This evolution of Bitcoin utility will continuously unlock its potential, integrating additional DeFi applications and cross-chain integrations. - 12 Months: Launch of the Arbiter Network and Hero Applications
By the end of 2025, BeL2 will release its Arbiter Network, which will manage dispute resolution and transaction validation through a decentralised staking network. Major announcements regarding “Hero” applications will also be made, showcasing the full scope of what BeL2 can offer and adapting to global economic crises.
BeL2: Bitcoin Unleashed. Financial Freedom Without Compromise.
With 2024 is shaping up to be a very exciting year, The Elastos Foundation will be sponsoring BeL2. Not only will we witness the release and enhancement of Elacity DRM for video, showcasing Rong Chen’s 2017 vision for the first time, but Elastos’ move to develop BeL2 represents more than a strategic shift; it’s a redefinition of Bitcoin’s capabilities using SmartWeb technologies. As BeL2 continues to evolve, Bitcoin users and developers are invited to participate in this decentralised financial revolution. This is not just an upgrade; it’s an evolution that empowers individuals and communities, aligning with the ethos of decentralisation, financial inclusion, and freedom from institutional control. Next week, Elastos will release the BeL2 whitepaper and immediately begin its execution. To be among the first to read it, turn on notifications on Elastos’ Twitter for its announcement and join the community’s Telegram group.
