Author: GaryMa
On October 23, the exSat Network, a Bitcoin ecosystem expansion solution, officially launched its mainnet, and on November 5, it launched a cross-chain bridge, introducing a Staking function, bringing users a brand-new opportunity to earn Bitcoin staking rewards. The exSat cross-chain bridge was developed in collaboration with leading custodial institutions such as Ceffu, ChainUp, Cobo, and Cactus, and has undergone a comprehensive audit by Blocksec. It is now accepting individual users to Stake their Bitcoin on the exSat network and receive XSAT token rewards.
As of the time of writing, the exSat Network has attracted over $6.7 billion in total locked value (TVL), supported by more than 42 validators, and over 48% of Bitcoin's computing power is synchronizing data on the network. The main industry partners participating in the exSat Network include Matrixport, Spiderpool, Antpool, viaBTC, Everstake, HashKey Cloud, Blocksec, OKX, BitTrade, Bitget, ChainUp Cloud, and Cactus Custody.
As an innovative scaling solution designed specifically to expand and enhance the Bitcoin ecosystem, the mission of exSat is to bring Bitcoin's data on-chain and establish a modular ecosystem that supports smart contracts and cross-chain asset circulation through an innovative hybrid consensus mechanism and decentralized asset custody protocol. The realization of this vision will not only enable Bitcoin to meet the existing cryptocurrency demand, but also support the development of more decentralized applications (DApps) and drive the application of Bitcoin in L2 expansion and emerging DeFi, BTCFi, and other fields.
This article will attempt to interpret the system architecture of the exSat Network, including the hybrid consensus mechanism, state data indexing mechanism, XSAT token economics, and the future prospects and challenges of exSat.
Architecture Analysis
Consensus Layer: PoW+PoS Hybrid Consensus
The hybrid consensus mechanism of exSat aims to ensure accurate synchronization of Bitcoin block data to the exSat network by combining the PoW and PoS consensus mechanisms, thereby expanding the Bitcoin ecosystem.
On the PoW side, by introducing Bitcoin miners, exSat leverages the existing security framework of Bitcoin to maintain the data integrity of the entire network. Miners not only consolidate data synchronization, but also act as synchronization nodes in the form of mining pools, synchronizing the original Bitcoin block data to exSat, ensuring the accuracy of the data.
On the PoS side, the PoS verification layer brings an additional verification mechanism to the network. Validators participate in governance and block verification by Staking BTC and XSAT tokens, verifying the data provided by the mining pool synchronizers, thereby enhancing the stability of the network and aligning the interests of the validators with network security.
Data Layer: On-Chain Storage and Indexing of State Data
In the exSat system, Bitcoin data is synchronized to the PoS validators by the PoW mining pool synchronization nodes after verification and parsing, and is then stored in RAM (i.e., the memory RAM of EOS, where the founder of the exSat Network, Yves La Rose, is the founder and CEO of the EOS Network Foundation).
This makes the data consensual and fully trustworthy. Asset data is only available for DApp reading, and the update permission is limited to the block parsing contract. Data can be directly accessed through smart contracts or called from off-chain services through RPC endpoints, supporting the continuously expanding Bitcoin ecosystem.
The exSat indexing system can handle various asset types, such as BTC, Ordinals, Runes, BRC20, BRC-721, ARC20, etc. This multi-functionality ensures broad support for different assets and DApps, greatly enhancing the platform's appeal to users and developers.
Furthermore, exSat utilizes RAM to store BTC asset data, including UTXO and index data for other protocols, allowing smart contracts to directly access this information without the intervention of external oracles. This direct access enhances security, and the integration of smart contracts with BTC assets is also more seamless.
The exSat solution will be open to other Layer 2 networks. Most Layer 2 networks find it very expensive to generate their own indexing data, and exSat will make this data available to everyone. Anyone can use exSat's EVM smart contracts to access UTXO data.
Architecture Overview
The positioning of the exSat Network is to serve as the interface layer between the Bitcoin mainnet and the Bitcoin ecosystem, by fully utilizing the data and assets within the Bitcoin ecosystem, extending the powerful trust mechanism of Bitcoin to a wider range of application scenarios. This data and asset-driven integration approach gives Bitcoin assets broader possibilities in terms of functionality, scalability, practicality, and interoperability, providing a strong foundation for the entire chain application ecosystem, with the ultimate goal of bringing an intent-oriented, high-quality user experience to Web3 users.
As an extension and interface layer for Bitcoin, exSat adopts two modes: "downward" and "upward":
● Downward: exSat maps Bitcoin's core elements, such as block data and state, to the exSat network, and establishes asset custody between exSat and Bitcoin. This mode allows Bitcoin developers to flexibly utilize the extensibility of exSat on the basis of preserving Bitcoin consensus, creating conditions for the development of new decentralized application models. Developers can build "modular" DApps, keeping the trust rooted in Bitcoin, while executing business logic on exSat, thereby achieving a balance of efficiency and security.
● Upward: exSat provides the trusted data and assets from Bitcoin to DApp developers and various Bitcoin Layer 2 solutions, such as Antelope-driven solutions, Rollups, or other Bitcoin expansion projects. This not only significantly improves performance, but also allows developers to build customized blockchain solutions and provides richer possibilities for Bitcoin application scenarios, contributing to the widespread adoption of Bitcoin.
Through this bidirectional expansion model, exSat becomes a key component of the Bitcoin ecosystem, liberating Bitcoin assets and trust from the Bitcoin network and integrating them into a broader Bitcoin ecosystem. This mechanism not only opens up new frontiers for the development of Bitcoin DApps, but also lays a solid foundation for the infinite expansion of Bitcoin applications.
XSAT Token Economics
The economic framework of exSat is deeply inspired by the issuance principles of Bitcoin, committed to transparency and fairness. This is reflected in the XSAT issuance strategy, which adopts a fair launch approach to ensure equal opportunities for all participants to acquire the tokens.
Even though exSat has received a $20 million grant from the EOS Foundation to start up, it has not allocated any pre-mined token shares to the EOS Foundation, and the exSat team itself also has no pre-mined shares. Instead, it has pioneered a new node management model, receiving token donations from nodes (with a reference ratio of 20%, the specific ratio to be determined by the nodes themselves).
Total Supply and Halving Cycle
● Total Supply: The total supply of XSAT is 21,000,000, with the mining rate pre-set and publicly disclosed, ensuring the transparency and predictability of the supply mechanism, similar to the supply dynamics of Bitcoin.
● Halving Cycle: exSat adopts a halving model similar to Bitcoin, with each halving cycle containing 210,000 blocks. After the first 840,000 Bitcoin blocks are synchronized, the exSat halving cycle will officially begin (block height N > 840,000).
Initial Supply and Network Launch Stages
● Initial Supply: In the initial launch, each block reward is 50 XSAT, and the reward will be halved at the end of each halving cycle to control inflation and ensure the economic sustainability of miner rewards.
● Network Initialization and Launch: The network launch is divided into three stages: initialization, network launch, and the opening of XSAT Staking.
○ Initialization: In the initialization stage, the exSat Foundation will synchronize the historical data of the first 840,000 Bitcoin blocks as a snapshot, laying the foundation for the subsequent operation of the network, but this stage does not have any incentives.
○ Network Launch and Catch-up Period: After the initialization is complete, the exSat network will officially start the real-time synchronization of Bitcoin blockchain data. This process allows exSat to continuously receive and process the latest data from the Bitcoin blockchain, discovering and verifying UTXO and other cryptocurrency asset types. At the same time, the miner reward mechanism of exSat will officially begin. Since the synchronized and audited block data on the exSat chain is historical data prior to 840,000 blocks, there will be a catch-up process based on the current BTC block height.
○ XSAT+BTC Dual Staking Enabled: After the completion of block production, the XSAT staking phase will be launched. At that time, nodes will need to stake 10,000 XSAT to obtain node qualification, and the amount of BTC staked by the nodes will determine the subsequent rewards. Eligible validators can participate in the future decentralized cross-chain bridge multi-signature management and obtain gas rewards.
Future Outlook and Challenges
At the current stage where the Bitcoin ecosystem is facing growth bottlenecks, exSat, as an innovative expansion solution, may have the potential to become an important driving force for Bitcoin to achieve wider application. Currently, the Layer 2 expansion solutions in the Bitcoin ecosystem provide the capabilities of decentralized finance (DeFi) and cross-chain interaction, but due to issues such as cost, speed, and compatibility, they have not formed a wide user base. exSat, through its unique hybrid consensus mechanism and open docking layer strategy, synchronizes all UTXO data of Bitcoin to the EOS RAM, creating an open and accessible on-chain UTXO database. Most Bitcoin second-layer networks need to generate their own index data, which is very expensive, while exSat makes this data open to everyone. Anyone can use exSat's EVM smart contracts to access the UTXO data.
In the roadmap planning, exSat is divided into four stages:
1. EVM-compatible smart contract solution: the current mainnet stage, and in the future, universal gas charging will be realized through account abstraction.
2. Establish cooperation with mining pools to stake more Bitcoins to build stronger trust: Previously, exSat has announced a comprehensive strategic partnership with MatrixPort, and MatrixPort will issue nBTC, a new Wrapped BTC version of this product, on the exSat platform, which is pegged 1:1 with Bitcoin, and will use it for various BTCFi applications such as staking, lending, and trading on exSat. MatrixPort will also be committed to promoting the development of DApp applications and services on the exSat platform, including on-chain BTCFi applications, RWA, and cross-chain interoperability. It has also recently announced a partnership with ChainUp to provide comprehensive custodial services and reStaking revenue management for the exSat Network.
3. Open to other Layer 2 networks: exSat's open architecture can serve as the data availability (DA) and settlement layer for the Bitcoin ecosystem, providing support for Layer 2 solutions such as Rollups. Developers can customize on-chain extensions based on exSat's data layer, especially in areas such as zero-knowledge proof (ZKP) verification, asset management, and user interaction. exSat is expected to become the hub of Bitcoin ecosystem's Layer 2 networks, providing unparalleled infrastructure support.
4. Promote widespread adoption of the BTC ecosystem: In terms of ecosystem building, exSat is also ambitious. First, it embraces the trend and participates in and promotes the healthy and sustainable development of BTCFi. As an important part of the current ecosystem, BTCFi is undoubtedly an effective means to enhance the liquidity of BTC and can quickly generate significant impact. However, to realize the grand vision of transforming BTC into a new payment method, many challenges still need to be overcome. Next, exSat plans to explore the fields of RWA (Real-World Assets) and DePIN (Decentralized Physical Infrastructure Network) in depth, creating actual on-chain returns, thereby promoting the return of the underlying BTC assets of ETFs to on-chain interaction.
Although exSat has shown great innovative potential in the Bitcoin ecosystem, to realize its comprehensive expansion vision, it still needs to overcome a series of challenges, and the most unique one should be the strong binding with EOS RAM.
exSat relies on the efficient storage provided by EOS RAM to manage the UTXO set of Bitcoin, but this binding relationship also brings unique challenges. The current size of the Bitcoin UTXO set is about 4.5 GB, and in comparison, the storage capacity of EOS RAM is as high as hundreds of GB, which should theoretically be sufficient to support the current and even future needs of exSat. However, this dependence not only requires continuous maintenance and optimization in technology, but also to some extent limits the flexibility and scalability of exSat:
● Technical compatibility and upgrade difficulty: exSat relies on the underlying storage architecture of EOS, and any technological upgrades or changes in EOS may have a direct impact on exSat.
● RAM resource costs and storage expansion limitations: EOS RAM, as a special memory resource, its price fluctuates dynamically with market supply and demand, so exSat may face the risk of RAM price fluctuations when using EOS RAM to store Bitcoin UTXO data.
● Restricted ecosystem independence: The binding of exSat with EOS RAM to some extent limits the independence of its ecosystem. Although exSat is a Layer 2 expansion solution for the Bitcoin ecosystem, its close integration with EOS RAM requires it to consider the resource and market factors of the EOS ecosystem. This may pose integration challenges when exSat expands to other chain resources or cross-chain cooperation, affecting its compatibility and flexibility in a wider blockchain ecosystem.
Conclusion
As an innovative scaling solution designed specifically to expand and enhance the Bitcoin ecosystem, the exSat Network, with its hybrid consensus mechanism, EVM compatibility, and open on-chain UTXO database, brings rich application scenarios and financial opportunities to Bitcoin users and developers. Through in-depth cooperation with leading custodians and mining pools, exSat is committed to building a Bitcoin expansion ecosystem that supports decentralized finance, cross-chain interaction, and on-chain returns from real-world assets (RWA).
However, in the process of realizing this ambitious vision, exSat still faces a number of challenges. Especially the strong binding with EOS RAM, this technological dependence not only provides efficient storage support, but also brings potential issues such as cost fluctuations, technical upgrade difficulties, and limited ecosystem independence. How to balance continuous innovation and overcoming these obstacles will be a key for exSat's future development.
Compared to most other chains aiming to expand BTC, exSat is more focused on extending Bitcoin's powerful consensus and trust beyond the Bitcoin chain. Through exSat's innovative approach, users and developers from different backgrounds will experience intent-centric operations and unified liquidity. By abstracting complexity, exSat enables a wider audience to seamlessly leverage the power of Bitcoin and its Layer 2 solutions, promoting a more inclusive and accessible blockchain ecosystem.
