Bitcoin could be one upgrade away from overtaking Ethereum DeFi

A single, long-dormant drawstring of code, hidden heavy wrong the archetypal Bitcoin stack, tin present a suite of caller functionality that could perchance spot the Bitcoin web rival Ethereum successful presumption of decentralized concern (DeFi) activity. 

The upgrade is called “OP_CAT” (short for cognition codification concatenate) and refers to a fewer elemental lines of codification primitively introduced by Satoshi Nakamoto. This codification was portion of Bitcoin’s archetypal scripting strategy and efficaciously accrued Bitcoin’s transaction inferior and expanded the assortment of operations users could execute with Bitcoin. 

However, Nakamoto was initially disquieted that OP_CAT could exposure the Bitcoin web to information risks, including denial-of-service (DoS) attacks and the instauration of exponential representation requirements that could perchance overwhelm the network. 

As a result, Nakamoto removed OP_CAT from the progressive opcodes successful 2010 arsenic portion of a broader effort to marque Bitcoin simpler and much robust. 

But successful October 2023, cryptographer Ethan Heilman and Botanix Labs pb technologist Armin Sabouri breathed caller beingness into the thought of OP_CAT, introducing a connection to reintroduce the opcode by mode of a brushed fork to the Bitcoin network. 

If approved, the upgrade volition bring a drawstring of caller upgrades to the network, introducing the anticipation of rollups and expanding Bitcoin Tapsprict and its astute contract-like functionalities.

Since then, OP_CAT has rapidly gained traction not conscionable among Bitcoin circles but besides successful the wider improvement community. 

On April 25, OP_CAT was granted Bitcoin Improvement Proposal fig 327, marking the archetypal existent measurement toward introducing and accepting the bundle upgrade.

While the OP_CAT upgrade is surely not abbreviated of advocates — astir notably Taproot Wizard co-founders Udi Wertheimer and Eric Wall — StarkWare CEO Eli Ben-Sasson is 1 of the cardinal manufacture heavyweights from the Ethereum broadside pushing for OP_CAT to beryllium introduced.

A “simple” summation with a large upside

Speaking to Cointelegraph, Ben-Sasson said it’s his extremity to assistance standard the Bitcoin web to beryllium susceptible of handling thousands of transactions per 2nd and marque Starknet the archetypal web that settles simultaneously connected Bitcoin and Ethereum.

The support of OP_CAT — which volition alteration rollups, covenants, fraud proofs and STARK scaling — holds the cardinal to achieving genuine scalability for Bitcoin, said Ben-Sasson. 

“By simply adding OP_CAT, you can’t present existent astute contracts connected Bitcoin itself. Bitcoin volition not beryllium capable to execute thing similar Uniswap, but you tin easy person Ekubo, which is similar a mentation of Uniswap v4 connected Starknet, moving connected an L2 [layer-2 network] connected apical of Bitcoin,” helium added. 

“But adjacent with this, you could technically person each of DeFi and more: gaming, SocialFi and DePIN.”

But not everyone is convinced of the necessity of OP_CAT for Bitcoin’s maturation successful the agelong term, saying that the existent operation of sidechains is already capable to standard Bitcoin.

Bart van der Voort, main strategy serviceman of Bitcoin liquid staking protocol pSTAKE, said OP_CAT could airs an unnecessary risk, fixed the comparative occurrence of Bitcoin sidechains successful scaling Bitcoin frankincense far. 

“It’s introducing a hazard — to a grade — for Bitcoin. Why messiness with thing that’s working?”

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“I truly don’t cognize if it’s that indispensable due to the fact that you tin already spot each of these broadside chains that are coming up and gathering astir Bitcoin itself. This should beryllium much than enough.”

Bitcoin sidechains notation to networks similar CORE, Stacks, BitLayer and bSquared, which are abstracted blockchain networks that tally parallel to the Bitcoin web but settee to the Ethereum Virtual Machine (EVM) and usage a span to transportation assets betwixt them and the genitor network.

CORE — overmuch similar different Bitcoin sidechains — allows Bitcoiners to span their idle Bitcoin (BTC) to its protocol CORE DAO and gain a output connected BTC that would different beryllium near sitting passively successful a acold wallet. 

The largest Bitcoin sidechains, ranked by marketplace share. Source: DefiLlama

Ben-Sasson has heard of the risks associated with introducing OP_CAT and launched a $1-million probe assistance money for developers arsenic portion of a broader effort to measure the pros and cons of OP_CAT and guarantee that it tin beryllium safely and securely implemented. 

Sidechains aren’t capable to determination the needle

Labrys laminitis Lachlan Feeney takes the different broadside of the argument, saying that sidechains simply don’t connection capable successful the mode of innovation oregon information to marque them charismatic to OG Bitcoiners.

“There are nary existent L2s connected Bitcoin close present — different than Lightning Network, which doesn’t bash excessively much.”

Feeney said the bulk of the existent cohort of Bitcoin L2s are fundamentally nary much than EVM-settling L2s and glorified bridges that are often, incorrectly, labeled arsenic Bitcoin layer-2 networks. 

“A batch of these projects adjacent settee to Ethereum and person a span to Bitcoin, and portion they’re technically Bitcoin-aligned, they’re not truly what anyone could telephone a existent Bitcoin L2.”

Herein lies the problem, Feeney said. Because the existent swathe of Bitcoin sidechains doesn’t settee natively to the network, they don’t fundamentally let for the affirmative feedback loop of enactment that would beryllium indispensable to propel Bitcoin to 1 time rival Ethereum successful immoderate meaningful sense.

“All of the sidechains being enactment guardant close present are conscionable fast, short-term solutions. The lone mode Bitcoin DeFi grows larger than Ethereum DeFi is erstwhile you person monolithic Bitcoin whales moving their superior astir and plugging them into the protocols.”

“And to bash that, you request to determination towards having a legitimately trustless environment, and OP_CAT is perfectly going to person a precise ample relation to play successful doing this.”

Feeney said the way guardant for Bitcoin DeFi and different imaginable applications built connected the web pursuing the instauration of OP_CAT isn’t needfully going to beryllium 1 of abrupt wide adoption, saying that it whitethorn instrumentality a portion for the famously cautious Bitcoin maximalists to get with the program. 

“I don’t deliberation the Ethereum DeFi assemblage is going to permission Ethereum and each of a abrupt commencement utilizing Bitcoin L2s and Bitcoin DeFi and immoderate else.”

“You besides person a monolithic contingent of the Bitcoin assemblage that are going to look astatine a batch of these protocols and applications arsenic scams and shitcoins and privation nary portion successful that arsenic well, particularly erstwhile these are sidechains that are settling to different networks.”

To Feeney, OP_CAT solves this occupation by offering existent inferior and information connected Bitcoin astatine the basal level.

OP_CAT isn’t conscionable an upgrade; it’s a liferaft

But Feeney doesn’t conscionable deliberation that OP_CAT is simply a chill upgrade for Bitcoin that could bring astir DeFi and different capabilities; helium said it’s really a important constituent to the network’s endurance successful the agelong run. 

A communal interest among some critics and advocates of the Bitcoin web is that it volition yet scope a constituent wherever it volition nary longer beryllium capable to prolong itself nether its existent economical model. 

Right now, Bitcoin is astir wholly babelike connected miner gross and fees, and — barring the idealistic and improbable script wherever the terms of BTC perfectly doubles each 4 years — artifact rewards won’t beryllium capable to prolong and incentivize involvement successful securing the web forever. 

Source: Charles Guillemet

“Bitcoin cannot past agelong word arsenic it is today. It has to person a thriving L2 ecosystem,” said Feeney. 

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“If you instrumentality it to the extreme, astir 90-something percent of miner gross contiguous comes from artifact rewards. Eventually, artifact rewards adust up and determination are nary much artifact rewards. And so, miner gross has to travel from transaction fees. So, you volition yet get to a constituent wherever Bitcoin indispensable prolong itself based connected transaction fees oregon it dies.”

“A batch of radical deliberation that’s 100 years away, but it’s really lone 1 oregon 2 halvings distant erstwhile the artifact reward is truthful tiny that they’re not capable to prolong the information of the network, and truthful transaction fees person to emergence substantially,” helium added.

“Its options are: It fails to make an L2 ecosystem and it dies, oregon it has this thriving L2 ecosystem wherever the L1 becomes a colony concatenation and thrives.”