Rollup BTC Framework

Bitcoin Rollup Framework: Whitepaper 0.1

1. Introduction

Bitcoin remains the most secure and decentralized cryptocurrency network, but it suffers from limited throughput and lacks native support for complex execution logic. This document presents a Rollup framework for Bitcoin, enabling off-chain transaction aggregation, virtual machine processing, and on-chain proof of correctness via Taproot scripts and fraud-proof mechanisms.

2. Motivation and Goals

The goal of the framework is to provide a scalable, trustless Layer 2 (L2) solution without modifying Bitcoin’s consensus rules. The solution aims to be: • Compatible with existing Bitcoin nodes • Secure in terms of fraud detection and conflict resolution • Flexible and extensible: from simple payments to BitVM and RGB support

3. Architecture

Below is an architecture diagram that reflects the core components and their interactions:

[User Transactions]
      ↓
[Rollup Executor (VM)]
      ↓         
[state_root, step_chain]
      ↓
[Taproot PSBT Generator] ←→ [Fraud Proof Handler]
      ↓
[Bitcoin TX → Taproot Output]
      ↓
[Watcher / CLI / Daemon]
      ↓
[PSBT challenge → On-chain dispute resolution]

3.1 Components

• Rollup Executor (off-chain VM): aggregates user transactions, computes state_root and step_chain • Taproot PSBT Generator: builds addresses and scripts with multi-branch logic • Fraud Proof Handler: processes disputes and generates PSBT challenges • BitVM Script Tree (optional): script tree with step-by-step proof support

3.2 Data Flow

Simplified flow in excode:

input: user_transactions[] block = VM.aggregate(user_transactions) state_root = VM.compute_state_root(block) step_chain = VM.generate_step_chain(block) taproot_tree = Taproot.compile(step_chain, fraud_paths) address = taproot_tree.generate_address() bitcoin_tx = Bitcoin.publish(address, commitment=state_root) if Watcher.detects_fraud(bitcoin_tx): fraud_proof = FraudHandler.generate_psbt(bitcoin_tx) broadcast(fraud_proof)

The real process is orchestrated by a CLI utility and background daemons integrated with HWI and logging.

4. Rollup Block Format

{ "txs": [...], "state_root": "...", "step_chain": ["step1_hash", "step2_hash", ...], "timestamp": 1680000000, "signer": "..." }

5. Verification and Proofs

5.1 Fraud-path

Each Taproot script may include a branch with OP_SHA256 step == expected, OP_CHECKSEQUENCEVERIFY timeout, and OP_RETURN log to confirm step validity. If verification fails — the fraud proof is accepted and the challenger wins.

Example code for step verification:

for i, step in enumerate(step_chain): expected_hash = expected_steps[i] computed = sha256(step.input_data)

if computed != expected_hash:
    return FraudDetected(step_index=i, actual=computed, expected=expected_hash)

return NoFraud()

This logic can be implemented as OP_SHA256 + OP_EQUAL inside Taproot branches and validated through PSBT.

5.2 PSBT and Signing

The PSBT format is used with HWI support to allow hardware signing of challenge transactions without exposing private keys.

6. Security

• All transactions are protected by a fraud-proof mechanism: dishonest operators can be challenged. • OP_CHECKSEQUENCEVERIFY ensures enforced resolution deadlines. • Timeouts: if a challenger fails to complete a step — they lose. Timeout logic table: Step Timeout (blocks) Condition Action on Expiry Provider response 10 No response to step Challenger wins Challenger response 10 No next hash provided Prover wins Final step 5 Dispute unresolved Challenger loses

This logic is embedded in Taproot scripts via OP_CHECKSEQUENCEVERIFY.

7. CLI and Automation

The fraud_cli.py provides: • Block validation • PSBT challenge generation • HWI signing • Auto-broadcasting • JSON reports • Watcher daemon with logging to fraud_daemon.log

8. Extensions and Modularity

• BitVM-compatible SHA256 step-chain in Taproot branches • RGB integration • state_root commitment via OP_RETURN or Taproot • Penalty mechanisms and provable exits

9.Conclusion

This framework enables Bitcoin scalability without protocol changes, offering a flexible infrastructure for L2, compatible with current wallets, nodes, and hardware devices.

PS: I would like to hear your opinion on this matter.



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