Introduction

Synopsis

Bitcoin has grown into a mainstream asset with a $1.2 trillion market cap, with leading institutions like BlackRock holding and trading BTC via ETFs. However, much of the BTC is sitting idle. There is a pressing need to better utilize this massive amount of capital, especially in the context of help securing Proof-of-Stake (PoS) networks and Actively Validated Service (AVS). BitHive aims to revolutionize Bitcoin by providing a secure, scalable platform tailored for native BTC staking to serve a variety of use cases. We propose a modular architecture for all types of PoS based networks that benefit from the security guarantee provided by staked BTC, without bridging or relying on third party custodians. Furthermore, BitHive acts as a cornerstone for all restaking primitives to be built upon, empowering a diverse set of AVS.

Background

Proof-of-Stake is a class of blockchain consensus mechanism to prove that validators have put “stake” (something of value, usually the base coins of the networks) into the network that can be destroyed (aka slashed) if they act dishonestly. It has become the main consensus algorithm for many blockchain protocols, including Ethereum, due to its scalability, better energy-efficiency, and reduced centralization risk. In essence, PoS chains are secured by capital (stake) instead of work, unlike PoW chains.

Despite these advantages, PoS chains are incredibly difficult to bootstrap. It usually means that a PoS network needs to provide a significant amount of token incentives to secure the chain, which results in a high inflation rate. The inflation tends to create selling pressure of the token, hindering the growth of the network. What's worse is that the volatility of an early stage token could further exacerbate the problem, leading to even higher inflation, sometimes over 100% as witnessed in a lot of chains launched in the past few years.

AVS faces similar bootstrapping challenges. An AVS is any blockchain-based system that uses restaking mechanisms to support unique validation methods, such as oracles, bridges, data availability layers, sidechains, and more. Many dApps are dependent on these services, and each service used to rely on its own security, leading to compounded vulnerabilities.

BTC as an asset is naturally better suited to help secure PoS chains and AVS. It represents about half of the total market cap of all crypto assets, has a very low utilization rate, and is less volatile. BTC itself is also not used to secure the Bitcoin chain due to its PoW nature, making it an ideal collateral for securing PoS networks and AVS.

BitHive’s Bitcoin Staking Protocol

BitHive was thus created to address the growing demand for a secure and scalable platform for native Bitcoin staking and restaking. We present a modular architecture for all types of PoS blockchains that can benefit from the security guarantee provided by staked $BTC. The protocol does not rely on bridging or third party custodians. The staked $BTC from BitHive can also be restaked to serve various AVS use cases.

BitHive utilizes native Bitcoin scripts on the Bitcoin chain, ensuring the highest degree of security. BitHive facilitates the Bitcoin staking operations using NEAR’s Chain Signatures, and decentralized off-chain relayers, which we will expand in the below sections. It is worth noting that users only need a BTC wallet to operate; they do not need NEAR accounts or $NEAR tokens. When considering only deposits and withdrawals, the system does not require trust in the NEAR’s Chain Signatures or the relayers.

For restaking, BitHive integrates Allstake’s Meshed Restaking. Meshed Restaking is a concept pioneered by Allstake; it enables users to natively restake a wide range of assets (LSTs, LRTs, LP tokens, stablecoins, etc.) on multiple chains including NEAR, Ethereum, Solana, Ton, and more. Most notably, Meshed Restaking allows the PoS chains/AVS to use a combination of these assets, including their own base/governance tokens for shared security. For instance, a new AVS XYZ can accept both $BTC and its token $XYZ for shared security. This not only expands the use cases of staked $BTC, but also enables the PoS Chains/AVS to simultaneously seek the most robust security while capturing value for its tokens.