For years, the vision of decentralized finance (DeFi) on the Bitcoin blockchain has remained just out of reach. Bitcoin, renowned for its security and pioneering role in cryptocurrency, has traditionally lacked one critical component of DeFi: smart contracts. But that is set to change with the launch of the OP_NET testnet, promising to infuse the Bitcoin blockchain with programmable capabilities.
The OP_NET testnet is scheduled for release on Wednesday and is poised to introduce smart contracts to Bitcoin using the Tapscript component from the Taproot upgrade. This upgrade, which also facilitated the creation of Ordinals and Runes, is being leveraged to build a meta protocol system that enables the deployment of decentralized applications (dApps) and smart contracts directly on the Bitcoin network.
Chad Master, one of the pseudonymous co-founders of OP_NET, shared insights into the project’s mission. He emphasized that the goal is to bring DeFi to Bitcoin “in full force” without requiring users to move their assets to other blockchains. Master highlighted that the OP_NET approach is designed to maintain Bitcoin’s core attributes of security and decentralization. “People want to use Bitcoin without compromise and without moving it to another blockchain with less security and decentralization,” Master told Decrypt. The mainnet is anticipated to launch in late September, with the testnet serving as a precursor to this broader rollout.
OP_NET’s use of WebAssembly (WASM) is a significant technical advance, allowing smart contracts to be written in various programming languages including AssemblyScript/Typescript, Rust, Python, and C++. This flexibility could open the door for a wider range of applications and developers within the Bitcoin ecosystem.
According to the OP_NET light paper, the system is designed to streamline transactions by requiring only Bitcoin for transaction fees, eliminating the need for sidechain tokens. OP_NET transactions are marked with the string “BSI” in an arbitrary data field, indicating their initiation. These transactions are routed to unspendable Bitcoin addresses converted into contract addresses, where they are then processed by the OP_NET virtual machine (OP_VM). This virtual machine operates similarly to the Ethereum Virtual Machine, providing a Bitcoin-centric implementation of smart contract processing.
The development of OP_NET began in February, evolving from an earlier project focused on a Bitcoin-based decentralized exchange called MotoSwap. Co-founders Chad Master and Danny Plainview, along with lead developer Anakun, redirected their efforts toward OP_NET, with MotoSwap planned as one of the initial applications to be deployed on the platform. Master noted the need for essential DeFi components like lending protocols and stablecoins, indicating that the development of these elements is also on the agenda.
While Master expressed enthusiasm for OP_NET’s potential, he also acknowledged the challenges that come with a permissionless and decentralized financial system. “We don’t want to be responsible for launching scams or Ponzi schemes,” he said. “But we need to have the environment where these things can launch.” This frank admission highlights the balance OP_NET seeks to strike between fostering innovation and mitigating risks.
Additionally, OP_NET supports both fungible and non-fungible tokens, using designations OP_20 and OP_721 respectively. These labels are intended to align with Ethereum’s ERC-20 and ERC-721 standards, providing a familiar framework for developers and users transitioning from Ethereum to Bitcoin-based smart contracts.
Master also discussed the opportunity to tap into Bitcoin’s substantial, albeit dormant, liquidity. By enabling DeFi on Bitcoin, OP_NET aims to allow Bitcoin holders to generate yield and leverage their assets without leaving the Bitcoin blockchain. Master is confident in the project’s potential, asserting that those skeptical of this concept may be missing its broader implications. “Decentralized finance should live on Bitcoin,” he said, emphasizing that OP_NET’s main goal is to bring the level of expressibility and creativity found on programmable blockchains like Ethereum to Bitcoin.
As the launch of OP_NET draws near, it represents a significant milestone in the quest to enhance Bitcoin’s functionality and utility. By integrating smart contracts and DeFi capabilities into Bitcoin, OP_NET could reshape how the blockchain is used and open up new possibilities for developers and users alike.
