Bringing Smart Contracts to Bitcoin: The OP_NET Initiative

For years, developers have aspired to bring decentralised finance (DeFi) to the Bitcoin blockchain.

A significant hurdle has been the absence of native smart contracts.

The launch of the OP_NET testnet aims to change that.

Scheduled for Wednesday, OP_NET utilises the Tapscript component from Bitcoin's Taproot upgrade.

This upgrade, which enabled Ordinals and Runes, now facilitates the implementation of smart contracts on Bitcoin.

Permissionless Meta Protocol

OP_NET's co-founder, Chad Master, explained the project's goal.

He described it as a permissionless meta protocol system.

This system allows anyone to deploy decentralised applications and smart contracts on the Bitcoin network.

Master expressed a desire to see DeFi fully operational on Bitcoin.

He emphasised the importance of using Bitcoin without compromise.

Master highlighted that Bitcoin's security and decentralisation are crucial.

He described OP_NET as a solution that aligns with Bitcoin's principles.

Multi-language Smart Contracts

The project leverages WebAssembly (WASM) technology.

This allows smart contracts to be written in various languages.

These include AssemblyScript/Typescript, Rust, Python, and C++.

Master noted that only Bitcoin is required for transaction fees.

This contrasts with other systems that require sidechain tokens.

OP_NET transactions are marked with the string "BSI" in a data field.

These transactions are sent to unspendable Bitcoin addresses, converted into contract addresses.

The OP_NET virtual machine (OP_VM) processes these transactions and updates the contracts as needed.

Master likened the OP_VM to the Ethereum Virtual Machine.

However, he clarified that OP_NET represents a genuine implementation of the concept on Bitcoin.

Future Applications

The OP_NET team began their work in February.

Initially focused on a Bitcoin-based decentralised exchange called MotoSwap, they shifted to OP_NET.

MotoSwap will be one of the first applications to launch on this new platform.

Master mentioned the need for a few key components for a DeFi ecosystem.

These include a lending protocol and a stablecoin.

He acknowledged the risk of scams and Ponzi schemes in a permissionless system.

Despite this, the team aims to create an environment where various applications can launch.

Support for Tokens

OP_NET also supports both fungible and non-fungible tokens.

These are designated as OP_20 and OP_721, respectively.

This labelling is akin to Ethereum's ERC-20 and ERC-721 standards.

Master sees a significant opportunity in accessing Bitcoin's stagnant liquidity.

He believes this allows Bitcoin holders to generate yield from their assets.

Master also pointed out that decentralised finance should exist on Bitcoin.

He noted that some are not optimistic about this idea.

However, he believes they are simply not paying attention.