Multicoin leads the investment, how does Arch build Bitcoin infrastructure?

ZK series products and related protocols are springing up like mushrooms after a rain, and even parallelization is gradually becoming a trend. We see these two concepts constantly appearing on L2 and public chains, but they rarely appear combined on Bitcoin.

Of course there are factors of Bitcoin itself, such as limited scripting language, lack of data statefulness, and no native execution environment that can run complex smart contracts. Because of this, there are still very few people who dare to build challenging basic execution layers on top of it.

Recently, Arch Network, a Bitcoin native application platform, completed a US$7 million seed round of financing, led by Multicoin Capital, with participation from OKX Ventures, CMS Holdings and others. Arch emerged to build the basic execution layer of Bitcoin.

Arch Introduction

There are so many L2s that are rising day by day. So far, there are more than a dozen L2 solutions. However, L2 essentially involves the process of bridging developers and users. Users need to understand There is a certain level of trust between the bridge and L2. In addition, another obvious disadvantage is that liquidity will become fragmented, which will have a negative impact on the entire ecology.

What Arch wants to do is not to be Bitcoin’s L2, but to introduce programmability directly onto Bitcoin. Arch Network is a parallelized PoS network that uses ZK proofs to enhance Bitcoin’s native programmability. The network consists of a Rust-based zkVM (called ArchVM) and a decentralized validator network.

Arch draws inspiration from Solana and SVM (Solana Virtual Machine) and does not rely on any bridge or L2. It has three characteristics: programmability, parallel execution speed, and trustless interoperability. and composability.

Operating Mechanism

In the Arch network, asset transfers and state changes on the Bitcoin chain all occur on Bitcoin L1. Arch leverages ordinal numbers on Bitcoin L1 through "state chaining" to submit state changes in a single transaction, thereby reducing fees and ensuring atomic execution.

A specific transaction process is as follows: Arch calls Bitcoin transaction information, which contains basic information about execution, including the latest status and partially signed Bitcoin transaction (PSBT) and smart contract input. The Arch indexer constantly monitors new Bitcoin blocks, checking every transaction in a new block to see if it matches the calling format.

When the above transaction is detected, Arch compiles the relevant details and continues to execute the smart contract. The smart contract then generates a resulting state and an unsigned transaction to provide feedback on the asset transfer being executed and to verify the proof of smart contract execution. Everything is then transferred to the validator network, specifically to the lead node. During each Arch Epoch, a leader is randomly selected and the leader node propagates the received information to all other nodes in the network.

Each node performs attestation verification and incorporates state changes into the transaction before endorsing said transaction. The leader integrates signatures from these nodes until a predefined threshold is reached. Finally, once the transaction is signed by the necessary number of nodes, it can be broadcast on the Bitcoin network.

Currently, Liquidium, the lending protocol on Bitcoin, has been integrated into Arch, reducing its dependence on third-party oracles and technical service providers, and optimizing user experience. In addition, DeFi, stablecoins, oracles, etc. can also be developed based on Arch.

Transaction Fee Model

Arch charges users a fee for every BTC transaction processed by the infrastructure. The transaction fee model operates by including a variety of mechanisms. Among them, "per transaction fee" charges users a fee, including deploying smart contracts, transactions, Mint NFT and other operations. "Dynamic pricing" is equivalent to a fast-lane tip, which is dynamically adjusted according to network congestion and transaction complexity.

The various fees collected above are then used to develop the network through "fee allocation", part of which is allocated to node operators or validators, and the other part is reinvested in Arch infrastructure development and optimization, etc.

Although the official governance token and roadmap have not yet been announced, its core will focus on the development of smart contract infrastructure and the expansion of the decentralized node network. Currently, Arch will start with a select group of trusted nodes and, after ensuring stability and security, will incentivize the community to participate in the expansion.

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