Knowledge

$Even if a DEX becomes feasible, it would be extremely limited and reorg risk, variability in block times, and poor prices would keep usage low (for more, see “The Spectre of MEV on Bitcoin”). Bridge MEVil and Other Attacks Beyond an AMM, some potential opcode-driven attacks are worth highlighting. These include: Selfish Mining: Miners can withhold valid blocks, earning extra revenue. Recent work extends this “mining cartel” or “timing game” beyond issuance to fees, modeling block publication times and concluding that selfish mining is more profitable at lower hashrates. Attacks can be worsened by slow blocks and nonuniform network propagation times. 51% attack on optimistic rollup: 51% of hashrate can induce attacks from optimistic rollups and BitVM bridges. A well-capitalized attacker could rent hash and short bitcoin futures to profit from censorship and bridge attacks. Any attacker would need to accumulate a high number of ASICs, forgo future revenue and brick their machines. Notably, a zk-verification opcode (or possibly just OP_CAT) makes this attack infeasible. Oracle attack: Today’s Bitcoin lenders self-host their own oracles. While presigned transactions ensure the oracle cannot steal funds, if the marketplace also was the lender, they could liquidate collateral unfairly. Censorship of liquidations is also possible. Of course, other attacks (such as mass exit or loot attacks) exist and mapping all a priori is impossible. Few seem to worsen the numerousways Bitcoin can be poisoned today, but other opcodes (like an opcode for zk-verification) can actually limit attacks. What Should We Think About Other Opcodes? Beyond OP_CAT, there are a host of paths for upgrading Bitcoin. Whether for Lighting, Ark, covenants, discrete log contracts or something else, opcodes like OP_CTV, OP_VAULT, unlock expressivity. Bitcoin can embrace opcodes as long as it grows fees without creating economies of scale or exclusivity, and thereby keep out the worst forms of expressivity. It is our view that most expressivity — such as a BitVM attestation chain or a Bitcoin rollup — will benefit security long-term without true entrenchment. No fork is perfect, but by limiting more rivalrous forms of fee variance and creating new ways for the network to pay for its own security (with open forms of MEV or with a form of revenue smoothing), Bitcoin can guard against a decline in security over the next few halvings while maintaining or even enhancing sovereignty. There are a few designs that can open revenue to miners: Decentralized Exchange: With a SNARK verification opcode, miners could jointly operate a fast-finality, BTC-denominated exchange, earning settlement and trading fees. Rollup: A general-purpose, trustless, and verifiable sidechain, a Bitcoin-based rollup would pay for data availability, as well as finality. Miners can build their own rollups or work jointly. While one miner could verticalize and dominate, geographic frictions suggest multiple miners can compete. Moreover, with better opcodes the rollup can be fully noncustodial, making the sidechain a better alternative to centralized platforms (e.g., Celsius, FTX). Miners could even offset PoW costs with rollup fees. Payments Chains: statechains or designs like Ark will have on-chain costs paid to miners and may also be a candidate for priority finality via an accountable pool. Notably, any of these designs tied to Bitcoin will need better finality as issuance declines. By opening the door to accountable pooling, the door to egalitarian miner revenue widens. Again, we believe the alternative to embracing verifiable and democratic miner revenue is larger miners adopting hash-based forms of expressivity (or clunkery, abominable work-arounds). As such, it seems prudent to prioritize designs that push miners away from bad forms of expressivity. The Mining World of Tomorrow The siloed nature of private channels and the inability of miners to act independently of or verify large pools suggests pooling will fracture as issuance zeros. In tandem, without inflation (no, tail issuance is not a fix) and without democratic fee sharing, hashrate will drop and consolidate. In our view, this makes limited, safe expressivity and egalitarian fees a key pursuit. Should expressivity grow, verticalized miners across distinct geographies will be best equipped to survive as issuance dwindles. And with advancements in accountable pooling, apps, rollups and others can bid for fast finality, giving miners revenue and stabilizing Bitcoin in return for other parties getting secure, priority access to today’s most pristine asset. Going forward, we expect to see a market somewhat similar to mevgeth to evolve. Under this market, bundles of transactions which represent “spikey revenue” (e.g., Ordinals mints, data from rollups, etc) can be submitted to miners via a pool. The degree of openness of this pool to ordinary miners, along with its accountability, will, in many respects, determine Bitcoin’s durability. Neither rejecting nonstandard transactions (fees) nor private channels (which produce massive hashrate concentration) is an answer to Bitcoin’s dwindling security budget. If Bitcoin wants to cross the chasm from digital store of value or gold equivalent to electronic peer-to-peer cash, opening the door to utility that unlocks even-handed satsflow to miners is critical. So long as fees unlocked by a soft fork result in atomic transactions, one-shot off-chain agreements, and self-referential MEV from miner-supported apps (and, more critically, not exclusive or entrenching), revenue will be reasonably open and smooth for miners, allowing bitcoin’s unique scarcity to compound into a digital medium of exchange via its own applications and trust-minimized sidechains. Perhaps most importantly, failure to evolve safe expressivity implicitly embraces less worthy forms. Without reliable miner fees, less secure, less sustainable and less democratic forms of expressivity will proliferate among the biggest miners, while smaller ones simply close shop. BM Big Reads are weekly, in-depth articles on some current topic relevant to Bitcoin and Bitcoiners. If you have a submission you think fits the model, feel free to reach out at editor[at]bitcoinmagazine.com. Walt Smith is a guest author and partner at Standard Crypto. Active in Bitcoin since 2019, Walt previously led U.S. ventures at Cyberfund and worked at Galaxy in New York City. A Colorado local, he studied Austrian Economics at Grove City College in Pennsylvania. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.$