Types of protocols that may support Bitcoin scaling

We have seen the following protocols being used to scale Bitcoin.

• Federations: Custodial protocols (e.g. Fedimint) or blockchains operated by permissioned federation members (e.g. Liquid)

• State channels: Multi-signature contracts where parties can perform transactions while the channel is open

• Sidechains: Permissionless consensus protocols (blockchains) that exist to provide more functionality to BTC the asset, or are merge-mined with Bitcoin, or do both.

• Validiums or Optimiums: Blockchains that post DA somewhere but have a trustless BTC bridge.

  • This is not currently possible. Blockchains may be pseudo-validiums (or optimiums) if they have a BitVM bridge program, but no implementation of this is currently live.

• Rollups: Blockchains that post DA to Bitcoin (and have a trustless BTC bridge)

  • Rollups can have trust-minimized validating bridges (that may also validate ZK-proofs) with something like a BitVM bridge program. No implementations of this are currently live. The requirement for being a rollup is using Bitcoin as the DA layer.

• Other: Client side validation protocols, Taproot assets, L3s

Notes

• We classify rollups that settle to other blockchains that are not merge-mined, or don't use Bitcoin for data availability, as sidechains.

• We classify rollups that settle on blockchains that are merge-mined, or blockchains use Bitcoin for DA, as L3s.

• Alternative Layer 1 blockchains are not sidechains because they do not exist to scale Bitcoin.