A single long-dormant chain of code, hidden deep in the original bitcoin stack, can introduce a set of new functionality that could potentially make the bitcoin network rival ethereum in terms of decentralized finance (DeFi) activity.
The update is called “OP_CAT” (short for opcode concatenate) and refers to a few simple lines of code originally introduced by Satoshi Nakamoto. This code was part of the initial bitcoin scripting system and effectively increased the utility of bitcoin transactions and expanded the variety of operations that users could perform with bitcoin.
However, Nakamoto was initially concerned that OP_CAT could expose the bitcoin network to security risks, including denial of service (DoS) attacks and creating exponential memory requirements that could potentially overwhelm the network.
As a result, Nakamoto removed OP_CAT from active opcodes in 2010 as part of a broader effort to make bitcoin simpler and more robust.
But in October 2023, cryptographer Ethan Heilman and Botanix Labs principal engineer Armin Sabouri breathed new life into the OP_CAT idea, putting forward a proposal to reintroduce the opcode via a soft fork into the bitcoin network.
If approved, the update will bring a number of new updates to the network, introducing the ability for rollups and expanding bitcoin Tapsprict and its smart contract-like functionalities.
Since then, OP_CAT has rapidly gained traction not only among bitcoin circles but also in the development community at large.
On April 25, OP_CAT was bitcoin/bips/pull/1525#issuecomment-2075518532″ rel=”null” target=”null” text=”null” title=”null”>granted bitcoin improvement proposal number 327, marking the first real step towards the introduction and acceptance of the software update.
While the OP_CAT update certainly has no shortage of defenders, notably Taproot Wizard co-founders Udi Wertheimer and Eric Wall, StarkWare CEO Eli Ben-Sasson is one of the key industry heavyweights on the side. of ethereum pushing for OP_CAT to be introduced.
A “simple” addition with a big advantage
Speaking to Cointelegraph, Ben-Sasson said his goal is to help scale the bitcoin network so that it is capable of handling thousands of transactions per second and make Starknet the first network to simultaneously settle bitcoin and ethereum.
The approval of OP_CAT, which will allow accumulations, agreements, fraud tests and STARK escalation — holds the key to achieving genuine scalability for bitcoin, Ben-Sasson said.
“Simply adding OP_CAT, no real smart contracts can be introduced into bitcoin. “bitcoin won’t be able to run something like Uniswap, but you can easily have Ekubo, which is like a version of Uniswap v4 on Starknet, running on an L2 (Layer 2 network) on top of bitcoin,” he added.
“But even with this, you could technically have all of DeFi and more: gaming, SocialFi, and DePIN.”
But not everyone is convinced of the need for OP_CAT for bitcoin's long-term growth, stating that the current sidechain structure is already sufficient to scale bitcoin.
Bart van der Voort, chief strategy officer at bitcoin liquid staking protocol pSTAKE, said OP_CAT could represent an unnecessary risk, given the relative success of bitcoin sidechains in scaling bitcoin so far.
“It is introducing risk, to some extent, for bitcoin. Why mess with something that works?
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“I really don't know if it's that necessary because you can already see all these side chains that are emerging and being built around bitcoin itself. This should be more than enough.”
bitcoin sidechains refer to networks such as CORE, Stacks, BitLayer and bSquared, which are separate blockchain networks that run in parallel to the bitcoin network but are installed on the ethereum virtual machine (EVM) and use a bridge to transfer assets. between them and the main network.
CORE, like other bitcoin sidechains, allows Bitcoiners to connect their idle bitcoin (btc) to its CORE DAO protocol and earn yield on btc that would otherwise sit passively in a cold wallet.
The largest bitcoin sidechains, ranked by market share. Source: DefiLlama
Ben-Sasson has heard about the risks associated with the introduction of OP_CAT and launched a $1 million research grant fund for developers as part of a broader effort to evaluate the pros and cons of OP_CAT and ensure that it is can be implemented safely.
Side chains are not enough to move the needle
Labrys founder Lachlan Feeney takes the other side of the argument, saying that sidechains simply don't offer enough innovation or security to make them attractive to OG Bitcoiners.
“There are no real L2s in bitcoin right now, other than the Lightning Network, which doesn't do too much.”
Feeney said that the majority of the current bitcoin L2 cohort are nothing more than L2s sitting with glorified EVMs and bridges that are often, incorrectly, labeled as bitcoin layer 2 networks.
“Many of these projects even sit on ethereum and have a bridge to bitcoin, and while they are technically aligned with bitcoin, they are not really what anyone would call a true bitcoin L2.”
Herein lies the problem, Feeney said. Because bitcoin's current swath of sidechains do not sit natively on the network, they fundamentally do not allow for the positive feedback loop of activity that would be necessary to propel bitcoin to one day rival ethereum in any meaningful sense.
“All the sidechains that are being proposed right now are simply short-term quick fixes. The only way bitcoin DeFi grows more than ethereum DeFi is when you have huge bitcoin whales moving their capital and connecting it to the protocols.”
“And to do that, you need to move towards a legitimately trustless environment, and OP_CAT will definitely have a very important role to play in this.”
Feeney said the path forward for bitcoin DeFi and other potential applications created on the network following the introduction of OP_CAT won't necessarily be one of sudden mass adoption, and said it may take a while until famously cautious bitcoin maximalists , catch up. the program.
“I don't think the ethereum DeFi crowd is going to abandon ethereum and suddenly start using bitcoin L2 and bitcoin DeFi and anything else.”
“There is also a massive contingent of bitcoin people who will see many of these protocols and applications as scams and shitcoins and will not want to participate in that either, especially when it comes to sidechains that are being installed on other networks.”
For Feeney, OP_CAT solves this problem by offering real utility and security in bitcoin at the base level.
OP_CAT is not just an update; It's a life raft
But Feeney doesn't just think OP_CAT is an interesting upgrade for bitcoin that could lead to DeFi and other capabilities; He said it's actually a crucial ingredient for the network's long-term survival.
A common concern among both critics and defenders of the bitcoin network is that it will eventually reach a point where it can no longer sustain itself under its current economic model.
Right now, bitcoin is almost entirely dependent on miners' revenue and fees, and barring the idealistic and unlikely scenario where the price of btc perfectly doubles every four years, block rewards will not be able to sustain or incentivize growth. interest in protecting the network forever. .
Fountain: x.com/P3b7_/status/1849891319415517341″ rel=”null” target=”null” text=”null” title=”null”>Carlos Guillemet
“bitcoin cannot survive in the long term like it does today. You have to have a thriving L2 ecosystem,” Feeney said.
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“If we take it to the extreme, approximately 90 percent of miners' income today comes from block rewards. Over time, the block rewards are depleted and there are no more block rewards. Therefore, miners' income must come from transaction fees. Therefore, there will eventually come a point where bitcoin will need to sustain itself based on transaction fees or it will die.”
“Many people think that's 100 years away, but in reality it's only one or two halves away when the block reward is so small that it's not enough to keep the network secure, so transaction fees have to increase.” substantially”. ”he added.
“Your options are: you fail to create an L2 ecosystem and you die, or you have this thriving L2 ecosystem where the L1 becomes a settlement chain and thrives.”
