BIP-300 enables a new type of L2, where "withdrawals" (the L2-to-L1 txns) are governed by proof-of-work -- instead of a federation or fixed set of pubkeys.
BIP-300 emphasizes slow, transparent, and auditable withdrawals that are easy for honest users to get right and hard for dishonest miners to abuse. The main design goal for BIP-300 is ''partitioning'' -- users can ignore BIP-300 txns if they wish; it makes no difference to L1 if the user validates all, some, or none of them. The second design goal is ''security'' -- users of the L2 should feel confident that, [https://www.drivechain.info/blog/fees/ if the L2 network is paying a lot of fees], then miners will want to keep it around, and the withdrawals will therefore be processed accurately.
Once BIP-300 has established a "bridge" between L1 and these L2s, users can swap coins in and out instantly, only using BIP-300 for final settlement. This setup allows Bitcoin to process all the transactions in the world, of any shape or size, regardless of blocksize, node software, tech stack, or decentralization level -- all without altering L1 at all.
BIP-300 allows us to achieve [https://www.truthcoin.info/blog/zside-meltcast/ strong privacy], [https://www.truthcoin.info/blog/thunder/ planetary scale], and [https://www.truthcoin.info/blog/all-world-txns/ hundreds of billions of dollars in annual mining revenues], all with a [https://www.drivechain.info/blog/fees/ security model] that is [https://x.com/Truthcoin/status/1701959339508965405 much stronger than] that of the [https://www.truthcoin.info/blog/ln-blackpill/ Lightning Network].
The original motivation stretches back to Reid Hoffman, who [https://blockstream.com/2015/01/13/en-reid-hoffman-on-the-future-of-the-bitcoin-ecosystem/ wrote in 2014]: "Sidechains allow developers to add features and functionality to the Bitcoin universe without actually modifying the Bitcoin Core code...Consequently, innovation can occur faster, in more flexible and distributed ways, without losing the synergies of a common platform with a single currency."
| The age of the proposal (in blocks); and the number of "fails" (a block that does NOT ack the sidechain). This is discarded after the sidechain activates.
Withdrawals are transactions that remove coins "from" L2 (i.e., from the BIP-300 locked UTXO), and place them back on L1. Each BIP-300 withdrawal can pay out up to 6,000 withdrawals, and only one withdrawal can succeed at a time (per L2). Therefore, since all L2 users share the same large withdrawal-event, on L1 we call these withdrawals "bundles".
| A withdrawal attempt. Specifically, it is a "blinded transaction id" (i.e., the double-Sha256 of a txn that has had two fields zeroed out, see M6) of a txn which could withdraw funds from a sidechain.
( Thus we can overwrite a used sidechain slot. BIP-300 sidechains are already vulnerable to one catastrophe per 13150 blocks (the invalid withdrawal), so this slot-overwrite option does not change the security assumptions. )
Sidechain withdrawals take the form of "bundles" -- named because they "bundle up" many individual withdrawal-requests into a single rare L1 transaction.
On the L2 side, individual withdrawal requests are periodically combined into a single CoinJoin-like withdrawal bundle. This bundle is hashed [https://github.com/LayerTwo-Labs/bip300301_messages/blob/master/src/lib.rs#L374C1-L419C2 in a particular way] (on both L2 and L1) -- this "blinded hash" commits to its own L1 fee, but (notably) it does not commit to its first tx-input (in that way, it is like [https://github.com/bitcoin/bips/blob/master/bip-0118.mediawiki BIP-118]).
* This block already has an M3 for that nSidechain.
* A bundle with this hash is already in D2.
* A bundle with this hash already paid out.
* A bundle with this hash was rejected in the past.
Otherwise: M3 adds an entry to D2, with initial ACK score = 1 and initial Blocks Remaining = 26,299. (Merely being added to D2, does count as your first upvote.)
* It tries to upvote a bundle that doesn't exist. (For example, trying to upvote the 7th bundle on sidechain #2, when sidechain #2 has only three bundles.)
* There are no bundles at all, from any sidechain.
Each sidechain always has two "virtual bundles" -- an "abstain" bundle (0xFF), and an "alarm" bundle (0xFE). Abstain leaves the ACK count unchanged, and alarm reduces all ACK counts of all bundles by 1.
Any bundle which fails to receive a vote, is downvoted (and loses 1 ACK). If a sidechain has no pending bundles, then it is skipped over when M4 is created and parsed.
To upvote the 7th bundle on sidechain #1, and upvote the 4th bundle on sidechain #2, the upvote vector would be { 07, 04 }. And M4 would be [0x6A,D77D1776,00,0006,0003].
... then M4 would have been [0x6A,D77D1776,00,0000,0001].
==== Saving Space ====
The version number allows us to shrink the upvote vector in many cases.
Version 0x00 omits the upvote vector entirely (i.e., 6 bytes for the whole M4) and sets this block's M4 equal to the previous block's M4.
Version 0x01 uses 1 byte per sidechain, and can be used while all ACKed withdrawals have an index <256 (i.e., 99.99%+ of the time).
Version 0x02 uses 2 bytes per sidechain, but it always works, even in astronomically unlikely cases (such as when >1 sidechains have >256 bundle candidates).
Version 0x03 omits the upvote vector, and instead upvotes only those withdrawals that are leading their rivals by at least 50 votes.
For example, an upvote vector of { 2 , N/A, 1 } would be represented as [0x6A,D77D1776,01,01,00]. It means: "upvote the second bundle in sidechain #1; and the first bundle in sidechain #3" (iff sidechains #2 has no bundles proposed).
An upvote vector of { N/A, N/A, 4 } would be [0x6A,D77D1776,01,03].
We call a transaction "M5" if it spends from the escrow output and '''increases''' the quantity of coins. Conversely, we call a transaction "M6" if it spends from the escrow output and '''decreases''' the quantity of coins. See [https://github.com/LayerTwo-Labs/bip300301_enforcer/blob/master/src/bip300.rs#L462C1-L462C47 here].
Every time a deposit/withdrawal is made, the old UTXO is spent and a single new UTXO is created. (Deposits/Withdrawals never cause UTXO bloat.) At all times, the specific treasury UTXO ("CTIP") of each sidechain is cached in D1 (above).
* The first output of M6 is NOT an OP_DRIVECHAIN. (This OP_DRIVECHAIN becomes the new CTIP. In other words: all non-withdrawn coins are paid back to the sidechain.)
This proposal adds a single new opcode, OP_DRIVECHAIN, which has strict semantics for usage.
OP_NOP5 (0xb4) is redefined as OP_DRIVECHAIN if and only if the entire script is OP_DRIVECHAIN followed by a single-byte push and OP_TRUE (exactly 4 bytes).
The single-byte push contains the sidechain number.
Note that this is not a "script number", and cannot be OP_1..OP_16 or any other kind of push; it is also unsigned, and must not be padded even if over sidechain number 127.
The final OP_TRUE is to ensure this change remains a softfork:
without it, sidechain numbers 0 and 128 would cause the legacy script interpreter to fail.
