After five years of restless building in the cross-chain interoperability space,
Omnity launches on April 28th with its first Bitcoin asset, Runes, on the__Internet Computer__. Omnity's ability to connect any chain without relying on centralized multi-sig or off-chain components adds unprecedented potential to Bitcoin’s scalability, enabling Bitcoin Layer2 solutions.
Bitcoin in the Spotlight
Bitcoin’s been in the spotlight this year — ETFs, Ordinals, Runes, and the Halving. The surge in NFT trading, fueled by the popularity of Ordinals and BRC-20 tokens, prompted Binance and other cryptocurrency exchanges to integrate Layer 2 solutions like the Lightning Network to sidestep network congestion.
The Runes initiative sought to draw more developers and conventional users to Bitcoin—and it worked. The launch of Runes triggered intensive activity on the Bitcoin network, crippling the network and boasting some
Scaling Bitcoin
Over the years, the multilevered challenge of scaling Bitcoin without compromising its inherent characteristics has continued to drive the development of many innovative projects, all contributing to our collective, open-source, voluminous history of head-banging against the blockchain trilemma. Every solution balances trade-offs between decentralization, security, and scalability.
On Layers, SegWit, and Taproot
The concept of "
Taproot, implemented in 2021, brought several enhancements that improved privacy, efficiency, and flexibility in scripting. The core of Taproot is the introduction of Schnorr Signatures, which allow for key and signature aggregation. This means multiple parties can combine their keys to a single public key, allowing them to sign a single message. (Schnorr Signatures come into play later in this discussion.)
Taproot also introduced MAST (Merkelized Abstract Syntax Trees). Traditional Bitcoin scripts are bulky and fully expose the script upon transaction execution, compromising user privacy. MAST improves this by structuring the script as a binary Merkle tree, revealing only the essential parts needed for transactions, thereby boosting scalability and privacy.
While Taproot’s primary goal wasn’t directly focused on enabling specific Layer 2 solutions, its introduced features could facilitate and improve various Layer 2 protocols and applications by enabling more complex smart contracts on Layer 2 solutions.
Bitcoin Layer2s
Technically, Bitcoin's Layer 2 solutions still need to be fully developed. Conceptually, Layer 2 solutions emerged in the Ethereum ecosystem. However, Bitcoin's Ecosystem has only two methods for expanding from L1. One is through
Another method involves leasing security, exemplified by
So, when talking about Bitcoin L2s today, we refer to any execution environment primarily dealing with Bitcoin assets. They can be independent chains leveraging security leasing or even Ethereum L2s. Currently, the most active chains often derive their security not from Bitcoin but from Ethereum. Suppose they're connected to the Bitcoin ecosystem. In that case, they're considered execution chains for Bitcoin, while their mainnet is also responsible for asset issuance and settlement, akin to the relationship between central and commercial banks.
What does Omnity bring to the Bitcoin community?
Omnity establishes a trustless and highly secure asset bridge between Bitcoin's mainnet and Layer 2 solutions with a 100% end-to-end on-chain protocol stack. Omnity runs on the
Who built Omnity?
The development team behind Omnity has been tirelessly attacking interoperability issues for years. In line with our philosophy of a more open, secure, and fair Internet, the team, called cdot back then, adopted and built on IBC (
The Birth of a Perfect Invisible Hub
As Octopus, we proposed Substrate IBC (
While pioneering a NEAR IBC light client, we chose the
Specific primitives of ICP’s advanced technology allowed the Omnity team to solve some of IBC’s stickiest limitations. A full discussion of this discovery is beyond the scope of this article but can be found
TLDR: In the Omnity network, ICP smart contracts called Customs and Routes replace IBC’s peg zones and light clients, respectively, and the browser/wallet takes over the job of the relayer.
In Omnity, IBC’s peg zones are replaced with ICP Customs smart contracts, eliminating the need for an independent security and incentive model. Smart contract runtime on the hub chain enables heterogeneous blockchain extensibility. Now, various types of light clients, in the form of smart contracts, can run on the hub to facilitate communication with different blockchains. Customs acts like a customs checkpoint by handling user asset locking and routing assets to various chains — connecting L1/L2/L3, or appchains.
IBC light clients are replaced with ICP Route smart contracts in Omnity. Because Cosmos designed the Tendermint consensus (now CometBFT) with the IBC light client in mind, a ready-to-use on-chain light client existed for Cosmos SDK chains. This isn’t true for other blockchains. In addition, light client verification isn’t good enough for settlement chains, which are cornerstones of Omnity security — especially considering that some light clients, including Eth2,
Finally, the Omnity User’s browser/wallet takes over for the relayer. ICP’s
How Does Omnity Work with Bitcoin?
Canisters are ICP smart contracts containing a program's code and state. Canisters can carry out complex computations, such as verifying a block header with hundreds of signatures or storing a few hundred GB of data on a chain, all at a very affordable cost, which is simply impossible on any other blockchain.
ICP builds 100% on-chain end-to-end tech stacks, so its Bitcoin integration is similar to running a Bitcoin node on-chain. ICP is integrated with the Bitcoin network at the protocol level, maintaining BTC code for easy transitions and data consumption. Canisters can read and write to the Bitcoin network.
The diagram below shows the Bitcoin Adapter and Bitcoin Canister, which have been live on the ICP mainnet for almost a year while Omnity built the other components.
A dedicated
Once the subnet nodes reach consensus on a new Bitcoin block, the block is fed to Bitcoin Canister, a UTXO indexer that continuously updates a whole UTXO set. The request is then sent to the Bitcoin network through the Bitcoin Adapter and is processed by the Bitcoin Network asynchronously.
Omnity BTI: The first fully on-chain Bitcoin Indexer
Omnity will deploy the Bitcoin Token Indexer (BTI) parallel to the Bitcoin Canister to support BRC20, Runes, and other Bitcoin assets. Omnity BTI will be the world's first fully on-chain Bitcoin token indexer, facilitating the fully trustless transfer of Bitcoin tokens to other blockchains and strengthening Bitcoin's position as a universal settlement layer.
What is ckBTC?
ICP’s
Omnity is a BTC Layer2 Enabler for All Chains
ICP’s on-chain Bitcoin integration is essential because it brings smart contract functionality to Bitcoin, opening up new possibilities for DeFi and Dapp development without congesting the Bitcoin network and driving up transaction fees.
Omnity will facilitate token transfers so tokens do not need to return to Bitcoin. They can be transferred to any chain connected to the ICP protocol fully on-chain with no witnesses or verifiers — the first fully on-chain token bridge.
Omnity only incorporates a settlement chain when full-node security can be achieved. For now, Bitcoin, Ethereum, and ICP itself meet this standard. However, almost all blockchains, including various types of L2, can be connected with Omnity as execution chains. Meanwhile, any token issued on a connected settlement chain will have unparalleled cross-chain interoperability through Omnity without liquidity provisions.
As discussed, Schnorr signatures allow for easy aggregation of multi-signatures and threshold signatures. ICP’s recent announcement of the integration of threshold-Schnorr signatures will enable Canisters to obtain their own Schnorr public keys and addresses, request ICP to compute Schnorr signatures for arbitrary messages, and support both BIP-340 and Ed25519. This extends Omnity’s scope of cross-chain assets trading to Ordinals and other asset types, along with future potential integrations with other chains that use Ed25519 variants, such as Solana, Polkadot, or Cardano.
Omnity is Anti-Fragile and Future-Proof
Omnity is a vast improvement over multi-signature or other external verification cross-chain bridges. It offers a trustless omnichain hub that enhances user experience and exhibits anti-fragileness against the vulnerabilities seen in centralized models.
Skeptics of our IBC design might question the need for verification proxies and suggest relying solely on external verification cross-chain bridges instead. However, because IBC is an open, layered protocol, it allows for the continuous evolution of the verification layer while maintaining IBC interoperability. So, Omnity can seamlessly integrate future advancements, such as replacing the proxy client with a ZK verifier once the technology matures, without disrupting any existing applications.
Omnity is poised to both keep pace with technological progress and lead it, ensuring that all connected blockchains can effectively function as Layer 2 solutions to Bitcoin. This vision for a secure, fully on-chain, cross-chain protocol underscores our dedication to adopting and advancing the best available technologies for Bitcoin scalability.