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Bitcoin Validated Services Explained: Unlocking BTC Security and Liquidity for dApps and Infrastructure

Bitcoin Validated Services harness BTC's unparalleled security and liquidity through SatLayer, LSTs, and LRTs, enabling a new level of capital efficiency. Similar to EigenLayer's AVS for Ethereum, BVS is unique as it is secured by BTC, the world's most secure and trusted asset.

SatLayer

• 3 min read
Bitcoin Validated Services Explained: Unlocking BTC Security and Liquidity for dApps and Infrastructure

Bitcoin Validated Services (BVS) represent a significant evolution in how decentralized applications and infrastructure operate, utilizing Bitcoin’s immense security and liquidity via SatLayer, Liquid Staking Tokens and Liquid Restaking Tokens (LSTs and LRTs, respectively). This enables a new paradigm of capital efficiency, similar to how EigenLayer’s Actively Validated Services (AVS) does for Ethereum, with the key distinction that BVSes are secured by Bitcoin — the one asset that is indisputably larger and more secure than Ethereum.

For example, by leveraging Bitcoin's robust security, dApps and infrastructure can reduce over-collateralization requirements, unlocking higher capital efficiency. BVSes empower developers to design and deploy the next generation of dApps and protocols.

In this post, we explore the fundamentals of Bitcoin Validated Services, how they work, and real-world applications, helping developers understand the powerful opportunities BVSes unlock in the growing Bitcoin ecosystem and throughout crypto.

What exactly is a Bitcoin Validated Service (BVS)?

A Bitcoin Validated Service (BVS) is any system (dApp or service) that uses restaked Bitcoin for unique validation methods in its operations. BVSes are built on top of by SatLayer, whose core architecture is deployed as a set of smart contracts on Babylon Chain (where Bitcoin can first be staked), similar to how EigenLayer is deployed on Ethereum.  BVSes define their unique validation methods via the fully programmable slashing that SatLayer provides, ensuring that validators adhere to certain rules and behaviors, providing an extra layer of accountability and protection.

In other words, BVSes utilize SatLayer’s Bitcoin restaking as the core mechanism to provide cryptoeconomic security for a wide range of use cases, often unlocking new possibilities, from the next generation of bridges, to decentralized finance (DeFi & BTCFi) applications including DEX and insurance, to zero-knowledge (zk) proof verification and settlement on Bitcoin.

How does a BVS work?

Figure 1: A comic analogy to explain what a BVS is

The core functionality of a BVS is anchored in SatLayer’s restaking protocol, which leverages Bitcoin’s economic value to deliver robust cryptoeconomic security across a diverse set of use cases.

Here are the key players BVSes interact with:

  • Restakers: Individuals or entities that restake staked BTC or LSTs through SatLayer
  • Operators: Operators run specific node software and perform validation tasks for BVSes.  They register with SatLayer, receive delegate restaked Bitcoin from restakers, select the BVSes they want to validate, earn rewards for their services, and pass those rewards on to their restakers.
  • BVS users: End-users or applications that utilize the BVS

Each BVS is made up of smart contracts to manage its operations, such as which operators are running and the allocation of restaked BTC providing security.  BVSes operate via a combination of off-chain execution and on-chain enforcement mechanisms. 

  • Offchain Container: This container enables the BVS to execute certain tasks offchain
  • Onchain Contracts: An onchain smart contract specifies the terms for slashing (penalties to prevent malicious behavior) and reward payments to operators. This contract is deployed on a specific blockchain to enforce security and accuracy.​​

BVS Use Cases

BVSes open up a wide range of possibilities for the next generation of developers!

Here are a few practical examples of how BVSes could be used in the Bitcoin ecosystem:

  • Bridge: In/out of Bitcoin and/or between different Bitcoin L2s/sidechains ,with bridge solvency guaranteed by restaked collateral
  • Cross-chain DEX: A decentralized exchange can use BVS to securely settle Bitcoin transactions across multiple blockchain networks, ensuring that all trades are validated with Bitcoin’s cryptoeconomic security
  • Insurance: A single or set of onchain insurance funds, as restaking and programmable slashing matches up well to insurance and payouts - products can include:
    • Slashing insurance
    • Economic insurance
    • Technical insurance

The next market leading DEX, bridge, or even AI agent could be built as a BVS, secured and powered by Bitcoin!

Summary

Bitcoin Validated Services (BVS) represent a groundbreaking shift in how decentralized applications and protocols can leverage Bitcoin’s security to enhance their own operations. 

By enabling restaked Bitcoin to serve as a security layer, BVSes offer developers a scalable, secure, and efficient way to build applications that are more resilient to attacks and fraud.

The potential for BVSes to transform Bitcoin’s role in the blockchain ecosystem is immense!

Developers who integrate BVSes into their projects can unlock new opportunities, enhance security, and high capital efficiency, contributing to the ongoing evolution of DeFi and the next generation of applications.

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