What Is Botanix? A Guide to the Bitcoin L2 Spiderchain

The Bitcoin Layer 2 (L2) landscape has seen many new entrants since the Lightning Network and Rootstock were introduced in 2018. 

Layer 2 solutions aim to scale Bitcoin by taking transactions off-chain and adding more features and use cases to Bitcoin. One of these new L2 entrants is Botanix’s Spiderchain network. 

Read on to learn about Botanix and what it plans to bring to the Bitcoin ecosystem. 

What Is Botanix?

The Botanix protocol is an EVM-compatible Layer 2 protocol for Bitcoin. Created by Botanix Labs, Botanix ensures funds and transactions from the main layer are secured through a multisig technology called Spiderchain.

Spiderchain is a vast web of special nodes called orchestrator nodes that guard the multisig wallets holding the Bitcoin bridged from the core layer using BotanixEVM.

These orchestrator nodes are special because they not only supply the liquidity needed to keep BotanixEVM running but are also the only entities tasked with creating new blocks, minting and burning BTC during the bridging process.

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Elements of Botanix, source: BotanixLabs.xyz

Anyone can run an orchestrator node, but because Botanix utilizes the proof of stake consensus, a given amount of BTC needs to be staked to qualify as a node. This stake also serves as security collateral to ensure the nodes don’t take user funds that are being bridged via Botanix and stored in the multisig wallets.

By bridging BTC funds from the main layer, you can spend or farm BTC in any of the decentralized finance (DeFi) applications built on top of the BotanixEVM.

What is the Spiderchain Network?

The Botanix Spiderchain is a series of successive multisigs operated by random subsets of Botanix Orchestrator nodes. Given that the multisig wallets are managed in a decentralized manner, security is guaranteed. 

The Botanix protocol links to Bitcoin’s base layer through a two-way peg bridge that facilitates the movement of Bitcoin back and forth between the Bitcoin network and the Spiderchain’s multisig wallets. See the illustration below:

These multisig wallets (in other words, the Spiderchain) are the full collateral of all BTC available on the BotanixEVM. 

Without them, it would be ineffective to separate Bitcoin (as an asset) from Bitcoin (the blockchain), a factor that’s fundamental in bringing to life a new decentralized network that has its own properties and supports DeFi for held BTC.

But these multisig wallets are not like other multisig wallets. Botanix calls them federated multisig wallets because they are run by a decentralized community of independent guardians.

How Does the Botanix Protocol Work? 

The Botanix protocol offers a flawless solution for transferring BTC between Layer 1 and Layer 2 environments. This is all thanks to the EVM-based architecture. 

As a Turing-complete L2 solution, Botanix works by utilizing decentralized multisig wallets operated by Orchestrator nodes. 

These Orchestrator nodes are responsible for burning and minting synthetic BTC, creating new blocks, and validating transactions on Botanix. The selection is based on the amount of BTC they’ve staked. Additionally, Orchestrator nodes play a role in the Spiderchain by protecting the Bitcoin locked in multisig wallets after it is bridged from the Bitcoin layer to Botanix. 

With every Bitcoin block, a new multisig wallet is also created. The Botanix network then randomly picks the Orchestrator node to safeguard any newly created multisig wallet. Users can effortlessly interact with decentralized applications (dApps) via these wallets linked to the Botanix EVM. 

The Botanix protocol utilizes synthetic BTC as its native currency. The synthetic BTC is pegged on a 1:1 ratio with Bitcoin. This means every Bitcoin can be exchanged for the same amount of synthetic BTC on Botanix, and every synthetic BTC can be redeemed for Bitcoin on the parent chain. The parent chain here refers to the Bitcoin blockchain. 

Also, by employing the PoS consensus protocol, all Orchestrator nodes guarantee honest participation in the network through their staked amounts.

These funds are locked on the Botanix Spiderchain. Rewards are paid out in Bitcoin, dependent on the base transaction fee, priority transaction fee, and downlifting fee when leaving the Botanix network to Bitcoin.

In the event an Orchestrator node takes part in any malicious activity, its staked BTC is slashed as punishment. 

How Botanix Protocol Secures Staked Funds?

To add another layer of security to the multisig wallets, Spiderchains employ an advanced cryptographic method called forward security. 

In forward security, even if an attacker acquires a cryptographic private key at some point in the future, they cannot use it to decrypt past transactions or communications, even if that particular key was used to secure the network. 

Two approaches make forward security possible:

• Rotational keys: Instead of depending on one long-term key for an extended duration, key rotation periodically changes the cryptographic keys, limiting the impact of a key compromise. 
• Ephemeral keys: Ephemeral keys, or short-term keys, help secure specified sessions or transactions. Even if someone got hold of these keys, they wouldn’t be of any help because they were limited to a specific occasion, transaction, or session.

Impact of the Botanix Spiderchain on the Bitcoin Network

By introducing a Bitcoin Layer 2 that’s EVM compatible, the Botanix Spiderchain aims to promote the creation of new dApps and decentralized finance products secured by Bitcoin for staking, borrowing, or lending BTC assets.

These dApps could be essential in expanding the Total Value Locked (TVL) of BTC on Bitcoin Layer 2s, which is one of Botanix's main objectives.

Advantages and Disadvantages of the Spiderchain

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Similar to other Layer 2 solutions, Botanix has its pros and cons.

Pros 

• Decentralization: As a Layer 2 network, Botanix leverages and preserves Bitcoin’s decentralization essence, enabling anyone to participate and operate full nodes. This helps to guarantee the protocol’s decentralized nature. 
• EVM compatibility: The Botanix protocol is fully compatible with the Ethereum Virtual Machine. This means that it can run Ethereum-compatible dApps and smart contracts, making it attractive to developers. 
• Forward security: The Botanix Spiderchain enjoys forward security via Spiderchain’s architecture, which guarantees the security of past multisigs, especially in the event a bad actor gains control of a cryptographic key.
• Security: Botanix fully operates on top of the Bitcoin network. Although it utilizes the PoS consensus method, it leverages Bitcoin’s PoW model, which enables it to enjoy Bitcoin’s security. 

Cons 

• Competition: The Bitcoin Layer 2 landscape is very competitive. Botanix will need to compete with other Layer 2 solutions for the same developers and users.
• Security inheritance: Botanix’s security is heavily dependent on the security features offered by Bitcoin’s PoW system. While unlikely, if Bitcoin’s security gets compromised, Botanix’s security will also be affected. 
• Speed: Both the Bitcoin and Botanix networks have different block creation speeds. This can lead to more wait times when it comes to processing cross-chain transactions. 

The Takeaway

Botanix is here to solve the scaling challenges facing Bitcoin by ensuring the process of moving funds from Bitcoin Layer 2 to Layer 2. This means that Botanix wants to ensure that BTC is highly flexible so that holders can extract more value from it through DeFi. 

One of the biggest limitations facing the Lightning Network happens to be the high cost of liquidity and the need for extremely active participation among network participants. Botanix claims its Spiderchain solves these two problems using federated multisig wallets, which help reduce the cost of liquidity by pooling funds from independent nodes. This also means the rest of the network participants don’t have to be very active for the network to keep running.

It’s still early days for Botanix Labs’ Spiderchain, so only time will tell what role this new Layer 2 will play in the Bitcoin ecosystem, but we’re excited to keep an eye on it. 

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