Bitcoin Developers Eye Zero-Knowledge Proofs for DeFi Expansion

Bitcoin developers are focusing on enhancing the blockchain’s decentralized finance (DeFi) capabilities through zero-knowledge (ZK) proofs, requiring a soft fork for implementation.

Edan Yago, a Bitcoin veteran and core contributor to the smart contract operating system BitcoinOS (BOS), emphasized the challenges of forking a blockchain with a value of $2 trillion. He stated, “Forking a blockchain, especially one with $2 trillion worth of value on it, is like open-heart surgery.”

A blockchain fork represents a change in code that creates a divergence. Forks can be “soft,” allowing older versions to interact with newer ones, or “hard,” which makes older versions incompatible and mandates all users to upgrade.

ZK proofs function as a cryptographic method to prove the validity of statements while ensuring privacy. Although Bitcoin’s software lacks this feature, implementations like OP_CAT and OP_CTV could potentially introduce it. Yago believes developers must demonstrate alternative methods for enabling ZK proofs without a fork.

BOS aims to achieve this through BitSNARK, a Bitcoin rollup protocol, part of a series of computing paradigms designed to enhance blockchain scalability. This development follows Robin Linus’ introduction of BitVM in October 2023, outlining a framework for enabling Ethereum-like smart contracts on Bitcoin.

BitcoinOS has open-sourced the “fully production-ready” BitSNARK protocol, giving developers access to ZK verification on Bitcoin while facilitating connections with other blockchains like Ethereum, Solana, and Cardano.

BitSNARK allows developers to condense large, complex computations into just 300 bytes that can be verified through standard Bitcoin transactions. This innovation could lead to BTCFi, encompassing DeFi on Bitcoin, and enabling decentralized exchanges, cross-chain bridges, and BTC-backed stablecoins.

While multiple projects are pursuing decentralized finance on Bitcoin, they typically depend on OP_CAT or OP_CTV codes that necessitate a chain fork. Yago seeks alternative routes to achieve similar outcomes.