On February 28th, at the ETH Denver official event StarkCity organized by Starknet, the technical forum focused on the deep integration between Starknet and the Bitcoin ecosystem, with the Chakra project, introduced by Starknet officials, capturing the most attention. Chakra is a Bitcoin restaking protocol based on Zero-Knowledge Proof (ZKP), aimed at enhancing the utility of the Bitcoin network through ZKP.

Chakra's core contributor, Joe, first shared how they utilize zero-knowledge proofs to activate and promote the liquidity and services maintained by Bitcoin holders. He noted that the narrative of restaking is very popular in the Ethereum and Bitcoin systems, exemplified by projects like Eigenlayer and Babylon. Chakra was proposed against this backdrop. Their goal is to implement a Bitcoin proof-of-stake protocol through zero-knowledge proofs, allowing Bitcoin holders to earn more by providing services.

Joe further explained to Starknet about Chakra's collaboration with the Bitcoin community, especially his interactions with Bitcoin miners in Asia, where he found that many miners were hesitant to participate in the Babylon project due to its "slashing" mechanism posing security risks. In contrast, Chakra proposes to use zero-knowledge proofs to protect the security of Bitcoin pledging. Users can lock Bitcoin in layer 1 and receive tokens on other blockchains or Bitcoin's layer 2. This model offers a new incentive for long-term Bitcoin holders and provides miners with a more flexible and feasible solution.

Additionally, the discussion touched upon the objective technical limitations Bitcoin faces today. Joe outlined how the Chakra protocol works, emphasizing the key steps in implementing a proof-of-stake protocol on Bitcoin, including proving the validity of Bitcoin block headers and proving that a time-locked transaction has occurred on Bitcoin. With these proofs, it's possible to prove on any other blockchain that a time-locked transaction has occurred on Bitcoin, thus providing rewards to the holders. Chakra introduces CairoVM's Layer2 application chain to the Bitcoin ecosystem, expanding Starknet's ecosystem applications to new scenarios and providing a new channel for Bitcoin holders and users to enter the Starknet ecosystem.

Finally, Joe discussed the advantages of Bitcoin over Ethereum in terms of proof-of-stake security, citing Bitcoin's more decentralized token distribution and global node distribution. These features make the services provided by the Bitcoin network more decentralized and secure. On March 13th, StarkNet will also host StarkCity in London, where Charkra officials will join Starnet to discuss further project details, inviting attendees to stay tuned.

Panel Discussion Details Follow

Host

We're also joined by Joe from Chakra, which is again a super interesting ZK-based re-stating protocol on Bitcoin. And I think today is just the right day to have this panel with so much buzz and excitement around how Bitcoin can merge with what all of these other cool, innovative tech stacks that we are building in this space. So, over to Francis and the panel.

Joe Yeah, we just set up a new project called Chakra, aiming to enhance the Bitcoin network's utility with ZKPs, focusing on system resilience and user empowerment. The restaking narrative is very popular right now as examplified by Eigenlayer in Ethereum system and Babylon in Bitcoin system. We just come up with an idea that if we can do it with ZKPs to enable proof-of-stake protocols in Bitcoin. That's what we want to do. By doing that, we can activate and facilitate liquidity and services maintained by Bitcoin holders. We have several protocols to provide several services through deploying different Dapps on Bitcoin. That's our idea.

Host

I think we're starting to help directly bridge the gap and bring some yield to Bitcoin. However, how do we work with the Bitcoin community, understanding how they have rejected a lot of innovative efforts within the protocol?

Joe I have talked with a lot of Bitcoin miners, especially in Asia. I just asked if they would like to participate in the Babylon and they said no. Because Babylon has a smeshing mechanism. If you stake your Bitcoin to Babylon nodes, you take the risk of being smashed. This is very unsecured. So there we come up with this idea: can we use ZKPs to secure the staking process on Bitcoin? In this model, users lock their Bitcoin on L1 and in return, receive corresponding tokens on other blockchains or Bitcoin L2s. So the new token is proof of the time-locking event on Bitcoin, and by doing so, we can have a Bitcoin directive to issue to those Bitcoin long-term holders. For miners, that's the same. Because right now, all these Bitcoins in cold wallets don't need to be transferred. They just need to send a transaction to time lock all the Bitcoins, maybe for one year, two years, or many more years, and they can get new tokens on Ethereum, Solona, or Bitcoin L2s. So that's more flexible and feasible than Babylon protocol. So I think by using Starkware infrastructure, we can enable a better proof-of-stake system on Bitcoin.

Host It makes a ton of sense. The first Bitcoin mining communities were around the Three Gorges Dam in China, and that was during kind of the 50 block reward era. So they have a lot of Bitcoin, and then Bitcoin mining got banned, and they didn't want to lose their exposure to Bitcoin, so they sold their ASICs and they bought more Bitcoin, and now they're looking for some yield via proof of stake. Okay, so that sort of covers the community nature of Bitcoin, I think, quite well. There also are just objective limitations to Bitcoin today. So I want to jump in a little bit on what those limitations are, and how you attempt to kind of route around those and make those easier to do.

Joe

Okay, let me try to explain how the Chakra protocol works in brief. For example, the key to having a proof-of-stake protocol on Bitcoin is how to prove a staking event happened on Bitcoin. And I think it takes two steps.

The first step is the proof of a Bitcoin block header. We can also call it a ZK Bitcoin Light client by doing so. So, we can see that there are many other projects who are trying to prove the validity of some block headers. For example, ZeroSync is also a project in the Starkware ecosystem. It's trying to prove the validity of the Bitcoin block. So we simply need to try to transfer the Bitcoin consensus into a ZK circuits. Then we can use the circuits to do the proving process. Yeah, and this is the first step.

Then we get a proof which can be verified to prove the validity of Bitcoin block header. And the second step is that we need a proof to prove that a time-locking transaction has happened on Bitcoin in a certain block. So this is actually a merkle proof. Because in a block header, there is a merkle root for the transactions. You can simply use a merkle proof to prove a transaction is in that block. But we can also use ZKPs to do that. If you go to the GitHub of the a16z, you can see that there is a project named ZKDrop. Yeah, it also used ZKPs to prove the amount and address you need to air drop tokens to. So this is also feasible in my mind.

So combining all these things together, there are two proofs. One is to prove the block header, the other is to prove a time-locking transaction on Bitcoin. By combining these two proofs, we can use them on any other blockchains to tell them that a time-locking transaction has happened on Bitcoin. And we can reward the stakeholders some benefits, for example, a new token, or some governance tokens, or the rights to participate in the blockchain consensus. So that's how we design the whole protocol. I know it's a little bit of technology, but I think it's easy to understand. But I think the main barrier is how to realize, how to implement all the circuits, all the proving systems, and how to optimize them. Right now, we have some VMs, ZKVMs. So it may be easier for us to implement all of this.

Host

Awesome. I appreciate it. So I guess in other words there, it's easy for the L2 to understand Bitcoin, and we can help the L2 understand Bitcoin by proving the L1, but it is still hard to have the L1 understand the L2. So instead of just trying to get the L1 to understand the L2, we're just going to have the L2 understand the L1 and leverage it from that. Or we can work together and we can do both.

Okay, I'm going to kick back to you on this one here, Joe. So in what ways, and this is a bit of a controversial question, but in what ways could Bitcoin be considered superior to Ethereum for proof-of-stake security?

Joe Yeah, of course. I think that's because the token distribution is really decentralized. You can see there are many participants in the Bitcoin network. For example, some mining machine manufacturer, some mining pools and some miners, as well some investors, they have experienced several bull and bear markets. And some newcomers are also there. For example, the MicroStrategy, they bought a lot Bitcoin. So I think the token distribution of Bitcoin is totally decentralized and the nodes are distributed all over the world. So it's more decentralized than Ethereum. So by doing so, we can enable some services provided by these decentralized participants in the network. So in my mind, that's the most important advantage of Bitcoin over Ethereum.

Host Yeah, agree. Economic distribution and decentralization is very important for economic driven security.

Learn more about Chakra through the following channels: https://linktr.ee/ChakraChain