Concept of subnets
Definition
A subnet in our Bitcoin Layer 2 solution is an independent subsystem that users can spawn from a parent subnet in a permissionless and on-demand manner, depending on their scalability requirements. Subnets operate with their consensus algorithms and cryptoeconomic rules, separate from their parent subnet, ensuring flexibility and modularity. These subnets are also firewalled from the parent network to provide robust isolation and security.
Hierarchy Trees
Subnets in our system are organized in a hierarchical tree structure that begins with a chosen "rootnet." In our case, the Bitcoin mainnet serves as the rootnet. From the rootnet, child subnets can be spawned, and the rootnet becomes their parent subnet.
Key characteristics of the hierarchy:
Parent-Child Relationship: Each subnet can spawn any number of child subnets, while each child subnet has only one parent subnet.
Infinite Scalability: Subnets can scale infinitely, enabling layer two and beyond for applications with diverse scalability requirements.
Native Communication: Subnets within a single hierarchy tree have native protocols for asset and state transfers, eliminating the need for custom bridges.
Lifecycle
The lifecycle of a subnet begins when it is established and ends when it is closed.
Establishing a Subnet
A minimum collateral requirement is defined during subnet creation by the subnet creator.
A standard fee for the Bitcoin transaction establishing the subnet is paid to the parent network.
Validators joining the subnet must deposit initial funds and provide collateral to participate in its operations.
Closing a Subnet
Conditions for closing a subnet include:
Zero Circulating Supply: A subnet cannot be closed until all users have returned their funds to the parent network.
Validators Leaving: If all validators leave a subnet while users remain, users must either:
Run their validator.
Wait for a validator to rejoin the subnet.
Bug-Related Failures: If a bug causes the subnet to fail, funds within the subnet can only be recovered with a valid checkpoint signed by the latest validator committee.
Staking
Staking is integral to the subnet's operation. Each subnet requires validators to lock collateral, i.e., BTC on Bitcoin L1, ensuring accountability and security. The native staking functionalities in our IPC-BTC L2 solution include:
Staking Collateral: Validators lock collateral to participate in the subnet.
Releasing Collateral: Validators can request to release their collateral when they exit a subnet.
Slashing Collateral: If a validator is proven to have misbehaved, their collateral may be slashed to maintain network integrity.
Fees
Establishing a Subnet
When creating a subnet, the following fees apply:
Collateral Requirement: Set by the subnet creator and must be met by all validators.
Transaction Fees: A standard Bitcoin transaction fee is paid for the creation of a transaction.
Validator Participation: Validators joining the subnet must deposit collateral and move funds from the parent network using the
joincommand, enabling checkpoint signing.
Closing a Subnet
A subnet cannot be closed until its circulating supply is zero.
Validators must collectively sign transactions to finalize the closure.
Users may incur standard Bitcoin transaction fees when transferring funds to the parent network.
This modular and scalable design ensures that subnets in our Bitcoin Layer 2 solution are secure, flexible, and capable of supporting a wide range of applications while maintaining Bitcoin's core principles of decentralization and trust.
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