Author:AYLO
Compiled by: Deep Wave TechFlow
Botanix is a Bitcoin Layer 2 equivalent of the Ethereum Virtual Machine (EVM). They currently have a full working product on testnet, which I think will be one of the most exciting Bitcoin-related releases this year.
I spoke with Botanix Labs founder Willem Schroe to learn more and better understand his Bitcoin Layer 2 perspective.
I'll also provide some resources at the end. As mentioned above, they have a testnet that is currently live. I highly recommend you check it out. It's always good to try, you never know what will happen later.
I invested in Botanix Labs after speaking with Willem and was impressed.
Summary
Botanix Labs is building the first fully decentralized EVM equivalent L2 on Bitcoin, where the ease of use and versatility of EVM meet the decentralization and security of Bitcoin.
Leveraging Bitcoin's Proof-of-Work (PoW) as the underlying settlement and layer 1 of decentralization, Botanix will use a Proof-of-Stake consensus model in which equity (represented by Bitcoin) is securely stored on the distributed network Spiderchain by random Decentralized multi-signatures secured by a subset of participants. You will be able to stake your Bitcoin on Bitcoin.
Tell us a little about yourself and how you created Botanix?
I grew up in Belgium and eventually became the national math champion there. I later completed my bachelor's and master's degrees in electrical engineering. Belgium actually has a great reputation in cryptography, so my master's degree was actually focused on cryptography. I ended up looking into authentication encryption and even managed to crack some encryption algorithms. At the time, I did not realize how cryptography would eventually become relevant to my career again.
After completing my studies, I worked in the chemical industry for six years before moving to Saudi Arabia for two years. It was in the Middle East, especially seeing the hyperinflation in Lebanon, that I fully understood the importance of cryptocurrencies. This led me to apply to Harvard Business School, which was my entry point into the United States.
At Harvard, I wrote Botanix's senior thesis, and our thesis has remained virtually the same since then. A year and a half ago, I was trying to understand where cryptocurrency infrastructure was heading. Interestingly, 15 years on, theories about infrastructure keep changing. However, our theory is straightforward. We believe that Bitcoin is a purely decentralized form of secure currency with almost no built-in utility. So, you have a huge dormant pool of capital just waiting to build something on it.
However, it is well known that building on Bitcoin is very difficult and everyone realizes this. At the same time, there are tons of utilities and applications outside of Bitcoin, many of which have product-market fit and create tremendous value.
I realized that all of these are built on what are called virtual machines. A virtual machine is essentially a software layer and follows the same principles as software technology. I realized that the Ethereum Virtual Machine was the most prominent and widely distributed. In the battle of software technology, distribution is paramount. When you look at Windows in the 80s, it wasn't the best technology or the most secure, but it had the widest distribution.
In the battle for software technology, distribution has always been key. So while Bitcoin may be in the lead as a form of currency, the EVM is the winning virtual machine. This gave rise to the idea of a second layer of Bitcoin, which sets us apart. The idea was conceived a year and a half ago, and we spent the first six months digging deep into cryptography to develop a fully decentralized second layer on Bitcoin that we called Spiderchain. Spiderchain is a technology capable of building a second layer.
We received a lot of positive feedback and reviews from the Bitcoin community. We started building and coming out of stealth in September, launched a public testnet in November, and are now preparing to launch mainnet. I believe we are the only company that has truly delivered a fully end-to-end working product.
Can you give us a brief overview of how Botanix works?
We have a complete equivalent to the EVM, so anything that runs on the EVM, you can copy and paste onto Botanix, and the whole thing is built on top of Bitcoin. Once you connect your MetaMask, you will generate a Bitcoin deposit address. This looks like a normal Bitcoin address, but it's actually a special type of address where in Taproot we encode your EVM address.
This means that from now on, this Bitcoin address is uniquely connected to the EVM address obtained in your MetaMask. We do this because we saw what Stacks and Rootstock did and what mistakes they made. We want to make it as easy as possible for people to get into Bitcoin's second layer, so when moving from Bitcoin to Botanix, it will feel as easy as bridging from Ethereum to a second layer like Arbitrum.
Example from testnet
So basically, with this address, you can now send Bitcoin directly from Coinbase, Kraken, or any exchange to this Bitcoin deposit address and then you'll have Bitcoin in your MetaMask. From that point on, it feels like Ethereum, but you're using Bitcoin for everything.
Which users do you think Botanix will attract – Ethereum Layer 2 users or native Bitcoin users?
I think the answer is a bit of both. In the cryptocurrency world, people often compare Bitcoin and Ethereum, with some people mentally aligned with one or the other. Some people prefer Bitcoin because it represents a fully decentralized currency, which is what matters most to them. Others are leaning more toward Ethereum, putting utility first. However, I believe there are users on both sides.
I know a lot of Bitcoin holders who actually want to leverage their Bitcoin for Bitcoin yield. But there is currently nothing that can do this. I know a lot of people want to use their Bitcoin on a permanent decentralized exchange, but there is no native access to that on Bitcoin. So this essentially allows any application that achieves product market fit on Ethereum to also achieve product market fit on Bitcoin. I've always had a theory that even Bitcoin users are human and behave very much like other people. So anything that already achieves product market fit on Ethereum can also achieve product market fit on Bitcoin, there just isn't the infrastructure to actually do it.
I think ordinals and BRC-20 prove that many Bitcoin holders are actually degens and they want to participate in various activities, but there is currently nothing suitable for them. What I've observed over the past few months, as we're doing large-scale business development, is that from a developer's perspective, if you are an Ethereum DApp and choose to deploy on Arbitrum or Ethereum, you will Facing fierce competition for the same users and capital. On the contrary, deploying on Botanix gives you the opportunity to be a first mover in the entire Bitcoin market, attracting all Bitcoin holders who want to do something.
I think 70% of the people or the capital will actually come from native Bitcoin, and the other part of the capital will come from Ethereum.
Are developers also interested in building native applications on Botanix?
Bitzy DEX
The Bitzy team is building a brand new DEX that uses a V2 front-end but uses a V3 aggregator on the back-end, which is logically similar to the Ethereum DEX. The Vertex team is building the next generation of perpetual contract DEX applications, improving the existing proof model. Other well-known perpetual contract DEXs are also considering deployment.
Palladium will announce a Bitcoin-backed stablecoin, which is a huge application in itself. Many people have tried to create a stablecoin on Bitcoin, but this has not been done yet. However, the biggest application for wrapping Bitcoin on Ethereum is basically having a Bitcoin-backed stablecoin, like MakerDAO does with DAI, but having a native and decentralized implementation on Bitcoin itself makes more sense. Therefore, the Palladium team is entering the realm of having a Bitcoin-backed stablecoin on Bitcoin itself.
Then, there are a whole bunch of different lending protocols. The most obvious use cases on Bitcoin are those that have already achieved product-market fit on Ethereum. Some are considering entering unique areas of Bitcoin, such as mining computing power. Others are interested in building DEXs, which may be more aligned with Bitcoin holders and their interests on a macro scale. But mostly, this is about bringing applications that already achieve product-market fit on Ethereum to Bitcoin.
Can people use BRC-20 with Botanix?
As you may know, the current user experience of the BRC-20 is very poor. Basically, you'll be able to use a bridge to move the main layer of Bitcoin to the second layer of Botanix, and then all of a sudden you can have blocks very quickly, start trading on the DEX, start trading in the protocol, and basically Access the complete ERC-20 DeFi ecosystem.
Are you planning to compete with high-throughput chains? Or want to carve out your own niche?
Very good question. the answer is negative. I think the game changer here is that we provide the infrastructure on Bitcoin. In fact, Spiderchain is designed more like Ethereum. We are able to support 10,000 to 100,000 different full nodes, and anyone can join the network, stake Bitcoin and run a full node. Therefore, this is also more attractive to Bitcoin holders, who prefer decentralization.
That’s the big game changer here. The blockchain trilemma shows that if you go for huge high throughput, it will limit your decentralization. Our second layer at Botanix essentially follows the Ethereum vision, requires more hardware, but still runs at 9-10 second speeds, but is able to achieve a high degree of decentralization. This vision favors decentralization rather than high throughput at scale. We believe this is one of the main reasons we have received a lot of support from the Bitcoin community. Our strong stance on decentralization is widely recognized within the Bitcoin community.
What are the fees on Botanix?
The fees here will be very low. Current Rollup is quite centralized in nature, leading to various issues and higher fees. To be censorship-resistant, live and unilaterally withdrawable, they need to push data back to Tier 1, thereby increasing the cost of Tier 2. In contrast, we are fully decentralized and anyone can run a full node and solve these problems. Therefore, our Layer 2 fees will be very low. We may not achieve huge speeds, but our fees will stay low because we won't have to send data back to the main Bitcoin layer, which would be very expensive.
What about speed?
Botanix is optimized like Ethereum. We are essentially like Ethereum in terms of the blockchain trilemma and rapid speed. However, we could also build a third layer, or even half a 2.5 layer, directly connecting to Bitcoin as the base layer and achieve these massive speeds. The EVM then acts as the data availability layer. Spiderchain essentially decentralizes Bitcoin to the bottom layer. It's similar to EigenLayer's design, but on Bitcoin, so we can ensure very fast scrolling there. This is our long-term vision. From that point on, you can achieve Solana-like or very fast upgrades on Bitcoin.
What do you think is the size of “sleeping capital” on the Bitcoin network?
The basic idea is that Bitcoin’s total market cap is three or four times that of Ethereum. Preliminary statistics show that ordinals and BRC-20 are actually also more or less three times the size of the NFT market we saw when Ethereum first exploded.
We also believe that the DeFi market on Bitcoin will be three times the size of Ethereum. I think at a trillion-dollar market cap, given that all Bitcoin is in ETFs, in long-term holder wallets, and about 20% of extreme Bitcoin maximalists don't want to do anything with their Bitcoin, Then there will be about 30% of the supply open. When you consider that Bitcoin is a trillion dollar asset, this market could easily reach $100 billion in DeFi.
