GOAT Network is placing its bets on zero-knowledge (ZK) proofs to leverage high Bitcoin Layer 2 yield. The network’s architecture builds squarely on top of Bitcoin, taking advantage of ZK proofs to prove the existence of information without having to disclose the information itself. This is the first applied step to solving this unique performance problem on the Bitcoin platform. It’s treatment of slow transaction finality and the absence of scalable, Bitcoin-denominated yield alternatives.
Addressing Bitcoin's Limitations
A Layer 2 solution like Polygon increases transaction processing speed and decreases congestion on the Ethereum mainchain by processing transactions off-chain. It continues to rely on the underlying chain for threat mitigation and final settlement. BitVM2 Beta seeks to improve Bitcoin's performance. Decentralized Bitcoin settlement, miner validation, and a trustless bridge are key components of a sound Bitcoin Layer 2.
"All transactions occur on the Layer 2 network but are ultimately settled on Bitcoin." - Kevin Liu
“All of our transactions are on our Layer 2 network,” co-founder and CEO Kevin Liu told. Despite where their thinking goes, they are ultimately settled on Bitcoin.
Security and Functionality
The system’s security derives from decentralized sequencers, a trustless bridge with an Optimistic Challenge Process, and zk-proofs. Decentralized sequencers prevent single points of failure. A trustless, cross-chain bridge with an Optimistic Challenge Process can positively identify and punish invalid withdrawals. Zk-proofs can only be created and verified if the underlying transaction is valid.
"If any disputes arise, Bitcoin miners are responsible for validating them. The bridge operates without intermediaries, ensuring no external party controls user assets." - Kevin Liu
Liu explains that whenever there is a disagreement, Bitcoin miners have to work to verify it. He further claims the bridge has no custodians, meaning no third party has control of users’ assets.
Yield Generation
Yields are earned through gas fees paid in Bitcoin on GOAT’s proprietary Layer 2. Users stake Bitcoin to decentralized sequencer nodes and receive a portion of the fees they are producing. Though Ethereum-based systems have widely adopted ZK proofs, rolling out ZK proofs natively on Bitcoin has presented significant technical hurdles.
"Nearly every Bitcoin holder we’ve talked to—large and small—wants yield, but they’re not willing to sell their Bitcoin to get it." - Kevin Liu
It’s something like Liu notes that every Bitcoin holder is dying for yield. Rather than selling their Bitcoin in search of it, they double down.
