Advertisement
UK markets close in 4 hours 28 minutes
  • FTSE 100

    8,442.51
    +22.25 (+0.26%)
     
  • FTSE 250

    20,894.04
    +144.14 (+0.69%)
     
  • AIM

    809.70
    +15.68 (+1.97%)
     
  • GBP/EUR

    1.1681
    +0.0003 (+0.03%)
     
  • GBP/USD

    1.2704
    -0.0002 (-0.01%)
     
  • Bitcoin GBP

    52,850.02
    -113.98 (-0.22%)
     
  • CMC Crypto 200

    1,369.99
    +15.57 (+1.15%)
     
  • S&P 500

    5,303.27
    +6.17 (+0.12%)
     
  • DOW

    40,003.59
    +134.19 (+0.34%)
     
  • CRUDE OIL

    79.80
    -0.26 (-0.32%)
     
  • GOLD FUTURES

    2,439.80
    +22.40 (+0.93%)
     
  • NIKKEI 225

    39,069.68
    +282.30 (+0.73%)
     
  • HANG SENG

    19,636.22
    +82.61 (+0.42%)
     
  • DAX

    18,771.22
    +66.80 (+0.36%)
     
  • CAC 40

    8,201.35
    +33.85 (+0.41%)
     

Willem Schroé: Building Botanix, a Bitcoin Layer 2 That Brings the EVM to Bitcoin

When Willem Schroé was 17, he came in third out of 10,000 in a national math competition in Belgium, his home country. His prize was a book on botanics, the study of mathematics and fractals in nature. The book inspired awe in him, as he was humbled by the notion that physics and mathematics are bigger than any one of us. Today, he feels the same way about Bitcoin, which is why he’s building a groundbreaking Layer 2 on the network. But, before we get to that, let me offer you some background on Schroé.

Frank Corva is the Business-to-Business Correspondent at Bitcoin Magazine and host of the new renaissance capital podcast.

Schroé completed a bachelor’s and master’s degree in engineering at KU Leuven, the best university in Belgium and one of the best universities in the world. For his graduate degree, he focused on cryptography with a specialization in authenticated encryption and forward secrecy. He pursued his studies in the school’s world-renowned Computer Security and Industrial Security (COSIC) program, where legendary cryptographers David Chaum and Len Sassaman once lectured. Schroé’s thesis advisor was Vincent Rijmen, inventor of the Advanced Encryption Standard (AES), which the U.S. government uses to protect classified data.

After graduating, Schroé couldn’t find a tech gig in Belgium, so he went into chemical engineering. He landed a job at a joint venture between ExxonMobil and SABIC in Saudi Arabia. On a business trip to Lebanon in 2019, he saw the ravaging effects of hyperinflation on the country. Deeply impacted by the experience, he decided to focus on building a better financial system on Bitcoin.

ADVERTISEMENT

“I committed myself to spending all my resources, all my capabilities to make sure I helped Bitcoin succeed as soon as possible, because I could really see the world was moving faster and faster into a darker place,” says Schroé. “I see Bitcoin as being the light.”

Soon after, he applied and was accepted to Harvard Business School. While at Harvard, he continued to think about how to move Bitcoin forward but also took notice of the popularity of NFTs and the amount of trading volume on decentralized exchanges (DEX). He still believed in bitcoin as sound money but could not ignore the other technologies in the crypto space that were achieving product-market fit. This is when he conceptualized Botanix, a Bitcoin Layer 2 that employs bitcoin as money on the Ethereum Virtual Machine (EVM) via a novel design structure that Schroé calls “the spiderchain.” The name Botanix was inspired by the subject of the book he won at age 17 — a nod to the idea that Bitcoin, which is governed by mathematics, is bigger than all of us.

Fast-forward to late-2023 and the Botanix testnet is live.

I spoke with Schroé virtually while he was attending ETHDenver, in March, to learn about how he thinks Botanix will be received by both the Bitcoin and Ethereum communities, why proof-of-stake is a secure consensus mechanism for a Bitcoin Layer 2 and what challenges he’s faced in deploying the Botanix testnet.

Interview has been condensed and lightly edited for clarity.

Please tell us about what you’re building at Botanix. You’re bringing the EVM to a Bitcoin Layer 2. Why do you think people want to use their bitcoin on the EVM?

I started realizing there's a split between Ethereum the asset and Ethereum the virtual machine. I strongly believe that a lot of the value that's being created on Ethereum is actually reflected in the EVM. When I think about the future running on Bitcoin — if you think 100 years ahead and the whole world runs on Bitcoin — you need to have stock exchanges, you need to have the whole financial system [on Bitcoin].

Bitcoin is a big breakthrough in terms of money, but EVM is the big breakthrough in terms of financial system

Decentralized exchanges on Ethereum are a 10x version of stock exchanges. If you compare Uniswap to the New York Stock Exchange, Uniswap is way more efficient and open 24/7. It's permissionless, capable of being accessed by anyone in the world. But I strongly believe that bitcoin is the best money. Like Michael Saylor would say, there is no second best. So, it makes the most sense to actually build [financial services] natively on Bitcoin. That's what we want to do, and I think it will play out very fast, because you can copy-paste any smart contract on Ethereum today and deploy it on Botanix.

When you start seeing that happen — when you see the bitcoin in your MetaMask — you realize that the EVM is just a software layer. To answer your question: “What would people want to do with their bitcoin?” One, since all the gas fees and transaction fees are in bitcoin on the second layer, you will be able to stake bitcoin and actually get native bitcoin yield. You will be able to trade bitcoin against other tokens. You will be able to launch a bitcoin-backed stablecoin on Bitcoin.

All these applications have reached product-market fit. This is the next step in actually building a whole world that runs on Bitcoin. It also immediately scales Bitcoin. We go from Bitcoin on the base layer with 10 minute blocks — very slow, fully decentralized. Botanix is a little bit faster — 10 second blocks like Ethereum and as decentralized as Ethereum. Then you go from there. You have the Layer 2s on Ethereum right now with very high throughput, like 0.2, 0.1 second blocks. You can have that as Layer 3 on Botanix. It's copy-paste.

Suddenly, you can see a future where you can scale Bitcoin to eight billion people. 100 years from now you'll have DEXs and decentralized lending and borrowing protocols [on Bitcoin], which is a 10x better version of the financial system that we have today. Bitcoin is a big breakthrough in terms of money, but EVM is the big breakthrough in terms of financial system.

HBS CPD headshots on August 30, 2021 in Boston, Massachusetts.  © Ann Hermes 2021
HBS CPD headshots on August 30, 2021 in Boston, Massachusetts. © Ann Hermes 2021

You used the phrase “100 years from now.” You’re obviously thinking long-term when it comes to Botanix. Do you envision tokenized versions of all real world assets (RWA) on Bitcoin?

Absolutely. That is the vision. I think we are going through the same cycle we saw over the last 100 years. When you go back 100 years, before the SEC existed, the 1910s or the 1920s, there were no rules and everybody could launch stocks for their own company. Today, that’s what we see with all the tokens. There's no regulation. In this new financial system, we are in the 1910s again. What I see a hundred years from now is bitcoin being the money and having a full financial system also running in a more decentralized, more permissionless version than we have today. I would hate it if we ran the whole world on Bitcoin but with the current financial system, where all the bitcoins are with central banks. They will just loan them out again and create new fake bitcoin. I do not want that future.

You’ve said that the EVM isn’t the best virtual machine technology out there. If you feel this way, why use it?

The parallel I always make is to Microsoft Windows in the 80s. Any software technology battle follows the same principles and rules. Windows in the 80s didn't win because it was the best or most secure technology. The reason it gained so much adoption is distribution. Windows was by far the best in distribution.

The EVM is definitely not the best, definitely not the most secure. There have been so many hacks on the EVM, but this gave rise to the whole audit industry. You also have a Lindy effect happening on the EVM [with certain dapps]. You could argue “Okay, we've seen a few smart contracts like Uniswap survive for so long without any smart contract hacks.” They could be considered more secure. But the base layer of the EVM is definitely not the most secure. It just has the biggest distribution.

I heard both yourself and some other more technically-minded people in the space say that proof-of-stake works for a second layer on Bitcoin but not as a base layer. Why is that?

That is a very good question. I was actually a proof-of-work maximalist before designing the spiderchain, but I realized that a proof-of-work on a second layer actually doesn't make a lot of sense. So, I looked into proof-of-stake and read all the different white papers. In 2022, when Ethereum merged to proof-of-stake, there were a lot of Bitcoiners, including Jack Dorsey, who were retweeting this article about why proof of stake is insecure. So, I read the article. Each of the arguments in it were actually solved if you build with proof-of-stake on a second layer. Let me go quickly over the arguments. Number one is the economic argument. Proof-of-work is a leaking system and proof-of-stake is a closed system. That means that proof-of-work has a decentralizing trend. You need to pay for the electricity, so value leaks out of the system. Bitcoin, over time, becomes more and more decentralized, because that value leaks out into the real world. Proof-of-stake is the opposite. It actually has a centralizing trend. The stakers get a bigger and bigger portion of the total 100% share of the assets over time. As a layer one, as a currency, that doesn't make a lot of sense.

With a second layer fully running on bitcoin, you can use proof-of-stake, which has a small centralizing trend. Let's say that 10-30% of all the bitcoin would be on the second layer. That is counteracted by the 100% of bitcoin that is actually decentralized. So, that's solved. The second argument is finality. The problem with proof-of-stake is what you call the nothing-at-stake attack. Basically, you stake some bitcoin, then you fork the chain and take away some bitcoin on one of the forked chains. So, you no longer have anything at stake and you can do a double-spend.

So, you’re leveraging all of these important dynamics from Bitcoin’s proof-of-work consensus mechanism. Now, please explain to us how the spiderchain works.

The spiderchain is designed to be inherently decentralized. When we started to design it, we looked at all Layer 2s and realized that all of them are basically centralized. All the Ethereum sits in a centralized smart contract. We designed the spiderchain to be capable of being as decentralized as Ethereum.

We saw the power of the EVM and we designed Botanix to be [compatible] with the Bitcoin Core, capable to run an EVM and decentralized. That is the box that we designed in to come up with the spiderchain. We call it a decentralized network of multisigs. We designed it much like the Lightning Network. The Lightning Network is actually a decentralized network of two-out-of-two multisigs. Take the idea of the Lightning Network, but think of it bigger. If you have 10,000 different people all running a full Botanix node, you will create a series of multisigs. You randomly choose 100 participants out of the 10,000 and they will secure multisig one. Then you do that again for multisig two and randomly choose 100 participants out of the 10,000 different nodes, and they will secure multisig two. You do that again for multisig three, and four, and five, and, after a while, you create a series of multisigs that create this whole overlay network on Bitcoin that anyone can participate in.

This network of decentralized multisigs is the spiderchain. Then you use that with a proof-of-stake consensus. If you try to steal any bitcoin, you'll get slashed. Proof-of-stake both secures the decentralized network, where the bitcoin actually sits in the multisigs, and the EVM.

You’ve said that you expect to get a lot of heat from both Bitcoin and Ethereum maxis for what you’re building. What has been the reaction from the Ethereum crowd?

On the ETH side of things, you have two typical people. You have the OG Bitcoiners, the people who started in Bitcoin, couldn't build on it and moved away from it. They went to Ethereum, but somewhere in their hearts, they still loved Bitcoin. There's a lot of people like that. A lot of the founders of Ethereum apps are OG Bitcoiners — even Vitalik [Buterin], right? Then you have the Ethereum maxis that probably entered the space during 2021-2022, and they just consider bitcoin a store of value. They don't understand why you would want to build on Bitcoin.

Ordinals, NFTs and BRC-20s blew up because suddenly you could do something with bitcoin

Do you find that there are plenty of people out there who like Bitcoin and Ethereum? Are people not as tribal as they appear to be on X (formerly Twitter)?

There's way more than people realize. When you look at Twitter, you hear the loudest voices, the most extreme voices. But I would say the majority of Ethereum enthusiasts have some bitcoin in their cold wallet. The fact is you cannot do anything with [bitcoin]. [In a follow-up interview, Schroé clarified that he meant to say you cannot do many things with bitcoin on-chain. He also shared that he’s well aware that just holding bitcoin as a hedge against currency debasement or using it for transactions in the real world has great value.]

There's no infrastructure to do something with it. You can go on Lightning and send a transaction, but that's about it. Botanix suddenly changes that. A big reason why Ordinals, NFTs and BRC-20s blew up is because suddenly you could do something with bitcoin. There's this huge amount of demand that is just waiting for applications. I'm seeing it coming from people who are ideologically more on the Bitcoin side and people who are more ideologically on the Ethereum side.

I wish you the best of luck in bringing the mainnet live. Do you have any final thoughts you’d like to share?

Try out the testnet. Once you see Bitcoin in your MetaMask, it’s a game-changer. If you've always wanted to build something on Bitcoin but couldn't and you've been building on Ethereum, definitely think about building on Botanix. If you are an Ethereum developer, and you've developed a smart contract, you have to ask yourself the question: “Where do I deploy? Do I deploy on Ethereum in a crowded market where you fight for TVL and users? Or I deploy on Botanix with a trillion dollars of TVL (referring to bitcoin on the base chain)?” It makes way more sense to deploy it on Botanix. Over the next two or three years, you'll see that play out. Over 10 years, you'll 100% see that play out, because bitcoin will always be the biggest capital pool [of any crypto asset].