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Arch: Everything you need to know
Arch is an interesting cross between a Bitcoin-native smart contract platform and a Bitcoin sidechain.
tl;dr
1. For users wanting to swap Bitcoin meta-protocol assets:
- No additional chain required
- No bridging required
- You don’t have to sacrifice self-custody
- You get trustless PSBT swaps (even across different meta-protocols)
- You transact at the cost and speed of Bitcoin
2. For meta-protocol swap liquidity providers:
- You lock up assets in the Arch node network (threshold signing setup)
- Trust assumptions are similar to a sidechain (you are trusting the Arch Network with your assets)
3. For users wanting more speed or advanced smart contract functionality:
- You lock up assets in the Arch node network
- You transact at the speed of Arch (faster txns than Bitcoin L1)
- Full state is maintained in the Arch Network, with granular hash commitments to Bitcoin L1 in the form of state UTXOs
- All smart contract executions take state hash UTXOs as inputs and result in state hash UTXO outputs
Summary
Because Arch enables 1, 2, and 3, you can see why I call Arch a cross between a Bitcoin-native smart contract platform and a Bitcoin sidechain. The use case determines the trust assumptions.
- Here’s a bit more about how Arch works -
Deploying smart contracts: Devs deploy smart contracts directly to the Arch Network. Arch uses a VM similar to the Solana VM.
Users interacting w/ smart contracts: Users trigger smart contract executions by sending signed messages directly to the node network. These transactions are processed and a proof is generated which is then verified by the Arch Node Network. The Arch Node Network is a permissionless network that anyone can join. Once transactions are verified, a set of Bitcoin L1 transactions are initiated which take the input state UTXOs coupled with the smart contract execution, which results in a new set of output state UTXOs.
Speed and wallet: You can transact at the speed of Arch (mempool chaining these state UTXOs as needed), and you can use any Bitcoin wallet. Arch uses the same signatures as Bitcoin so you don’t need a new wallet to interact with smart contracts on Arch. Any application frontend can show you your balances and then you can sign transactions for your assets using your Xverse wallet (or any other Bitcoin wallet).
Optionality for DA: Managing granular state commitments on Bitcoin L1 can be expensive, so if users are ok with using external DA, Arch will make it possible for users to move their state to the Arch Network if they want. Again, this is a volition model (you choose where you want to store your data) where users can choose their security level and the corresponding data availability level.
Trustless PSBT swaps
Liquidity providers deposit liquidity in the Arch Network (threshold signing setup). Now that there is liquidity in Arch, users can come and swap assets. Users come to Arch and request a PSBT matching the conditions of the trade they want. The Arch protocol provides the user with this PSBT and the user can then sign their end and broadcast the transaction to the network.
In this way, users wanting to use PSBTs to swap can interact trustlessly on Arch. You are only trusting that the Arch network will provide you with a PSBT, but your funds are never at risk. Technically the Arch Network could censor you (by not providing a PSBT) but they cannot steal your funds. Once you receive the PSBT from Arch, you can verify the authenticity of the PSBT yourself prior to signing.
This is an innovative way to enable a smart-contract-like AMM on Bitcoin L1 that is trustless for users wanting to swap.
Note that LPs essentially have sidechain trust assumptions (locking up funds in the Node Network) while users wanting to swap have Bitcoin L1 trust assumptions (aka trustless on top of Bitcoin).
This might be my favorite thing about Arch.
Bob’s Take
Arch’s main value proposition in my mind is enabling trustless cross-meta-protocol swaps. This means that as long as there is liquidity, you could swap BRC-20s for Runes, or OP_NET assets for BRC-20s, or Counterparty assets for Runes, etc. This is the first time I’ve seen trustless PSBT swaps across meta-protocols. Of course it isn’t trustless for the LPs, but enabling it for users is pretty fantastic.
Beyond the trustless cross-meta-protocol swaps, Arch is trying to be a Bitcoin-aligned sidechain. They post granular state hashes to Bitcoin L1 as State UTXOs, they have a prover / verifier network to verify correct transaction execution, and they have one of the best threshold signing setups I’ve seen (FROST / ROAST).
Very excited to see what comes next for Arch.