[BRC-H7LC] A non custodial staking for BRC20 Standard
Introduction:
The BRC-H7LC standard is an innovative approach within the Bitcoin blockchain, aiming to transform the BRC-20 token ecosystem into a more user-friendly and secure environment. This initiative fosters collaboration between the BRC-20 community and the Bitcoin Core development team, emphasizing a community-driven, modular approach to create a secure, scalable, and inclusive BRC-20 ecosystem. By starting with decentralized staking, the standard seeks to build trust and encourage long-term engagement within the rapidly growing BRC-20 community.
Incorporating Bitcoin Improvement Proposals (BIPs) 65 and 112, BRC-H7LC introduces secure, conditional transactions through Hash Time-Locked Contracts (HTLCs) , advancing staking and complex transactions. This aligns with the vision of providing more people access to decentralized finance (DeFi) by enhancing security, functionality, and trust in online transactions. The standard represents a significant technical and social milestone, aiming to bridge the gap between traditional Bitcoin development and the innovative BRC-20 standard, promoting financial inclusion and community growth.
Looking forward, the BRC-H7LC standard sets the stage for a broader integration into the DeFi landscape, aiming to improve security, scalability, and community collaboration. It envisions a cohesive ecosystem where advancements like non-custodial staking and decentralized escrow services are integrated seamlessly, leading to a more robust, decentralized, and user-friendly platform. The ultimate goal is to foster a strong, vibrant community that supports innovation and growth within the decentralized finance space on the Bitcoin timechain, clearing the path for a more accessible and equitable financial future.
Historical:
The BRC-H7LC standard marks a pivotal advancement in the Bitcoin ecosystem, evolving from the core developments within Bitcoin’s scripting language to enhance transactional integrity and flexibility. The standard’s foundation was laid with the introduction of BIP 65 by Peter Todd in 2014, which introduced the OP_CHECKLOCKTIMEVERIFY opcode. This significant innovation allowed for the integration of time-based locking mechanisms in blockchain transactions, enabling the creation of contracts that activate at predetermined times or block heights, thus ensuring secure and time-bound agreements within the blockchain infrastructure.
Further evolution was realized with the implementation of BIP 112 by contributors BtcDrak, Mark Friedenbach, and Eric Lombrozo. This proposal introduced the CHECKSEQUENCEVERIFY opcode, expanding Bitcoin’s scripting capabilities by allowing transactions to be conditioned on the time elapsed since the confirmation of another transaction. This development enhanced the flexibility of Bitcoin transactions, enabling a wider array of time-based contractual conditions and setting the stage for more dynamic and adaptable blockchain operations.
The synthesis of these technological milestones culminated in the BRC-H7LC standard, which amalgamates the functionalities of BIP 65 and BIP 112 within the BRC-20 token framework. This integration facilitates the use of Hash Time-Locked Contracts (HTLCs), incorporating both absolute (via OP_CHECKLOCKTIMEVERIFY) and relative (via CHECKSEQUENCEVERIFY) time-locks into transactional executions. This dual-layered approach significantly boosts the blockchain’s security, efficiency, and programmability, thereby fostering the development of innovative financial instruments and applications within the decentralized finance (DeFi) sphere. As such, the BRC-H7LC standard not only represents a leap forward in the utility of BRC-20 tokens but also signifies a comprehensive evolution in the broader Bitcoin ecosystem, bridging critical protocol improvements with the expanding DeFi landscape.
Characteristics:
The BRC-H7LC framework enables flexible transaction dynamics in Bitcoin using CheckLockTimeVerify (CLTV) and CheckSequenceVerify (CSV). It enhances DeFi capabilities, allowing direct staking on the blockchain, trustless escrow mechanisms, enhanced trading on decentralized exchanges, and secure cross-blockchain activities.
Key Features:
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Primary Function:
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The primary function of this proposal is to simplify staking processes and enhance security by utilizing OP_CHECKLOCKTIMEVERIFY to create time-locked staking scripts for BRC-20 tokens.
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Technical Specifications:
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The proposal outlines the technical implementation of staking scripts using OP_CHECKLOCKTIMEVERIFY, ensuring that tokens remain unspendable until specific lock periods expire.
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Interoperability:
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The proposed framework seamlessly integrates with existing UTXO based infrastructures, promoting interoperability and collaboration across diverse projects and metaprotocols.
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Security Measures:
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By incorporating dynamic time-locking mechanisms, the proposal enhances security against malicious actors within Timechain ecosystems, safeguarding the integrity of staked funds.
Use Cases:
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Direct Staking on Blockchain: BRC-H7LC allows holders of BRC-20 tokens to stake directly on the Bitcoin blockchain without intermediary custody services, promoting decentralization and security. Participants can customize staking terms using CLTV or CSV mechanisms, enhancing DeFi security and customization.
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Trustless Escrow Mechanisms: The framework enables conditional escrow services, improving transaction safety and transparency. BRC-H7LC supports fixed-time CLTV or event-based CSV escrow solutions, catering to various contractual needs and enhancing trust in online transactions.
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Enhanced Trading on DEXs: Decentralized exchanges can implement BRC-H7LC standards to offer trades with strict timing conditions, mitigating market risks like price slippage. Users can define transaction terms using CLTV or CSV, ensuring a safer and controlled trading environment.
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Security in Cross-Blockchain Activities: BRC-H7LC facilitates safe and conditional cross-chain interactions, ensuring asset transfers between blockchains adhere to pre-agreed terms set through CLTV or CSV stipulations. This enhances the safety and liquidity of cross-chain transactions, fostering connectivity among blockchain ecosystems.
How it Compares to Other Standards:
The main difference between ERC-20/BRC-20 conventional staking protocols and the BRC-H7LC lies in how assets are handled during staking.
In traditional staking, users delegate their assets to a custodian to earn passive income from staking rewards.
On the other hand, the BRC-H7LC model, which incorporates BIP 65 and BIP 112 into the BRC-20 framework, introduces a non-custodial approach by relying entirely on the utxo based model, allowing the staker to not spend his assets and still earn passive income from staking rewards.
This method enhances security and user autonomy, offering unprecedented flexibility and setting new standards for staking models and transactional capabilities in the blockchain domain.
Future Developments
The BRC-H7LC standard’s future will greatly impact blockchain and decentralized finance.
It will expand its integration with more blockchain networks and DeFi applications, enhancing interoperability. Security will also improve with advanced cryptographic methods to fight against evolving threats. Moreover, efforts are underway to handle the growing complexity of decentralized applications, ensuring the BRC-H7LC standard remains effective as DeFi expands.
A new BRC-H7LC standard staking solution for BRC-20 tokens is currently under development. Soon, the entire Ordinals community will be invited to interact within this beta version of a new liquidity staking model, early users being rewarded with a new token. Once this phase is completed, this staking solution will be expanded to a wide set of BRC-20 assets and Inscriptions.
Community and Ecosystem Development:
Fostering a vibrant community of developers, researchers, and users to collaborate on the evolution of the BRC-H7LC standard, encouraging open-source contributions, and facilitating widespread adoption and innovation
Regulatory and Compliance Advances:
Working alongside regulatory bodies to ensure the BRC-H7LC standard meets compliance requirements while promoting innovation and user protection within the DeFi sector.
Educational Initiatives:
Developing comprehensive educational resources and programs to increase awareness, understanding, and skilled usage of the BRC-H7LC standard among diverse stakeholders in the blockchain community.
Resources and Further Reading:
- General BIPs: Visit the GitHub page for BIPs (Bitcoin Improvement Proposals)
- BIP 65 (OP_CHECKLOCKTIMEVERIFY): Read about BIP 65 on GitHub
- BIP 112 (CHECKSEQUENCEVERIFY): Discover the specifics of BIP 112 on GitHub
- HTLC (Hash Time-Locked Contracts): Explore how HTLCs function at Bitcoin Optech
Discussion:
The advancement of the BRC-H7LC standard relies on a global collaboration across the cryptographic and blockchain communities. This collective effort is crucial for tackling the intricate issues of blockchain technology and enhancing decentralized finance on the Bitcoin timechain. The community is invited to contribute through research, practical case studies, constructive feedback, code improvements, and educational materials. This collaboration ensures ongoing improvement of the standard, promoting a secure, efficient, and accessible financial system within the Bitcoin framework. Everyone is encouraged to participate in shaping the future of decentralized finance.