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DLC Optimization Plan: Enhance Bitcoin Ecosystem Security and Scalability
Analysis of DLC Principles and Optimization Solutions
1. Introduction
The Discrete Log Contract ( DLC ) is a contract execution scheme based on oracles proposed by Tadge Dryja from MIT in 2018. DLC allows both parties to make conditional payments based on predetermined conditions, executing payments through pre-signed agreements and oracle-signed results. Compared to the Lightning Network, DLC has advantages in privacy, support for complex contracts, and counterparty risk control.
However, there are still some risks and issues with DLC:
This article will explore some optimization solutions to address the aforementioned issues and enhance the security of the Bitcoin ecosystem.
2. DLC Principle
Taking Alice and Bob betting on the parity of the hash value of the n+k-th block as an example:
3. DLC Optimization Plan
3.1 Key Management
Oracles should use BIP32 to derive child keys, and use the private key and counter hash as a random number to prevent duplication or loss.
3.2 Decentralized Oracle
Using Schnorr threshold signatures to implement decentralized oracles, enhancing security, reliability, and accountability.
3.3 Decentralization and Key Management Coupling
Using a distributed key derivation method, it allows oracle nodes to perform key derivation while only holding private key shares.
3.4 OP-DLC: Oracle Trust Minimization
Introduce an optimistic challenge mechanism, where oracles must stake in advance. Any honest participant can challenge and punish malicious oracles.
3.5 OP-DLC + BitVM bridge
Combine OP-DLC and BitVM to solve the funding change issue, provide multiple deposit and withdrawal channels, and achieve minimal trust in oracles.
4. Conclusion
DLC combined with technologies such as Taproot and BitVM can achieve more complex off-chain contract verification and settlement. Coupled with the OP challenge mechanism, it can realize oracle trust minimization, bringing more possibilities to the Bitcoin ecosystem.