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Understanding Mezo: Pantera and Multicoin participate in the investment to build the economic layer of Bitcoin L2

Frostand others2Authors

24-04-17 16:40

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On April 9, Bitcoin's second-layer network Mezo completed a $21 million Series A financing round, led by Pantera Capital, with participation from Multicoin, Hack VC, and Draper Associates.

The rapid development of "Inscription" has promoted the prosperity of the BTC ecosystem, but it has also intensified the competition for BTC network resources. Excessive gas is constantly increasing the entry threshold for BTC ecosystem players. The demand for L2 is urgent, and the flourishing L2 projects are attracting the attention of the community and investors.

Many BTC L2s prioritize the needs of Bitcoin miners rather than users, while Mezo prioritizes the economic needs of users and Bitcoin holders, and thus proposed the concept of the Bitcoin economic layer. To achieve this vision, Mezo focuses on HODLers who have been active in the BTC ecosystem for a long time.

The project team once said, "We want to ensure that people who own Bitcoin can actually run this chain." To this end, Mezo provides benefits to users who protect the security of the Bitcoin network to ensure that they will continue to hold Bitcoin, so that both holders and on-chain traders have certain benefits. The team hopes that anyone who really touches Bitcoin should be able to make money with Bitcoin, rather than just a useless decoration on a shelf.

What is the Bitcoin economic layer?

From the current projects running on the second layer of Bitcoin, we can roughly see that the well-known second-layer Bitcoin projects were established relatively early and have been exploring related technologies for a long time. Some of their developers are builders of the original Bitcoin ecosystem, some are builders of the second layer of Ethereum, and some are builders from connection technology.

With the maturity of the Bitcoin basic protocol, the underlying technologies such as Segregated Witness, Taproot, Schnorr Signature, MAST Merkel Abstract Syntax Tree, and Tapscript are gradually formed. However, new projects entering the second layer of Bitcoin generally do not have much accumulated advantages. Emerging teams need to find their own latecomer advantages, such as researching the latest technologies, solving the most lightweight and attractive needs first, and attracting a certain number of applications to enter.

Since most BTC L2 will use BTC as gas as an important part of the Layer2 narrative. From a strategic perspective, this increases miner income and stimulates the interest of community developers. But whether this can stimulate overall growth still needs to be questioned.

Therefore, the Bitcoin L2 that Mezo wants to build is not only a technical connection, but more of an economic connection, that is, to build the economic layer of Bitcoin.

According to Mezo, the Bitcoin economic layer focuses on user interests, by focusing on increasing users' wealth, community and productive uses, while expanding Bitcoin's core functions and changing the way users interact with Bitcoin, aiming to combine the core technology and functions of Layer2 with the economic needs of Bitcoin holders.

How does Mezo implement the Bitcoin economic layer?

Mezo aims to deepen the functionality of Bitcoin infrastructure by facilitating cheaper and faster transactions without deviating from the underlying principles of the network. To achieve this vision, Mezo focuses on long-term active holders of the BTC ecosystem, setting up three mechanisms: HODL Proof, HODL Score, and deposit custody.

Based on tBTC

Mezo uses tBTC as its foundation, which is a Bitcoin bridge created by Threshold Network. Threshold Network is a privacy-focused merged network that combines the functionality of Keep and NuCypher. Keep enables any user with BTC (and some ETH) to create tBTC by using a network of signers.

Unlike previous solutions, there is no central custodian for the locked Bitcoin. Signers are randomly selected, and a different group of signers is selected for each minted tBTC. Signers provide collateral (ETH) to ensure that they cannot easily run away with the funds. Additionally, deposits are always overcollateralized. That is, for every 1 BTC deposited, the signer must provide 1.5 BTC worth of ETH as collateral.

Another interesting aspect is that the signers create a unique address using the threshold signature protocol. This means that a single signer cannot take the funds. The cooperation of all assigned signers is required to perform the operation. If all signers wish to break the protocol and steal the locked BTC, they need to cooperate to do so. If they deviate from the protocol, anyone can provide evidence that the signer acted improperly. In return, the plaintiff will receive the signer's collateral as a reward. Since the signer's deposits are overcollateralized, there is more to lose than to gain from stealing BTC.

As an Ethereum token with the same value as BTC, tBTC acts as a bridge between Bitcoin and Ethereum. BTC holders can deposit BTC into smart contracts and receive tBTC.

All BTC in Mezo is held in smart contracts, and the locked contracts can be upgraded through multi-signatures run by the Mezo development team. Each minted tBTC is backed by the Bitcoin cryptocurrency in the reserve at a ratio of 1:1 and is protected by signers, nodes that manage Bitcoin deposits and redemptions.

Incentivizing BTC holders

Mezo uses HODL Proof as a consensus mechanism. At the launch of the Mezo mainnet, users can contribute to network security and earn income through HODL Proof. A portion of Gas removes Bitcoin from circulation. As network activity grows, this method can reduce supply, reward long-term holders and strengthen Bitcoin's security and economic foundation.

Users can lock BTC on Mezo to establish a HODL Score, which is calculated based on the user's Bitcoin deposits on Mezo and the results of inviting new users to participate in HODL. The longer the deposit is locked, the higher the score. At the same time, in addition to locking BTC, users can also lock MEZO tokens and verify transactions through CometBFT consensus to protect the network.

Currently supports deposits using BTC, tBTC and wBTC.

In addition, when a user HODLs on Mezo, he or she will receive 5 one-time use invitations that can be shared with friends, and the user's inviter can also receive 5 one-time use invitations. Users can get HODL Score based on the deposits of themselves, their inviters, and the inviters' inviters. Users can choose to lock their deposits for 2, 6, or 9 months. It is worth noting that locked deposits cannot be withdrawn before the end of the lock-up period, and unlocked deposits can be used.

HODL points are accumulated based on the amount of BTC deposited and the lock-up period, and all versions of BTC deposits can earn the same points. Locking 1 Bitcoin per day can earn 1,000 points, and longer lock-up periods can bring HODL score bonuses. Locking for 2 months can earn 3 times the score bonus; locking for 6 months can earn 10 times the score bonus; locking for 9 months can earn 16 times the score bonus.

How to get HODL score?

The project currently supports Metamask, Taho and Unisat wallets for connection. For native BTC deposits, Mezo currently accepts "traditional" or "native Segwit" wallet address types, that is, addresses starting with "1" or "bc1q". The project is working on adding nested segregated witness support (addresses starting with "3").

First, go to the project website and enter the invitation code. If you don't have an invitation code, you can join the project Discord to get it. After entering the channel, contact the administrator in the waiting room to enter the invitation code channel.

After entering the invitation code, click the arrow to access the deposit page.

The currency for depositing on Mezo is native BTC. If users want to deposit tBTC and wBTC, they can click the link at the bottom of the website after entering the invitation code.

After clicking "Connect Bitcoin Wallet", the system will prompt you to enter the "Log in with Bitcoin" page. Please note that once you proceed to log in and sign the transaction, the user's wallet will be bound to the invitation code. One invitation code corresponds to one wallet address, and the user will only be able to deposit more BTC using the same address.

After clicking "Log in with Bitcoin", click "connect" and "sign" in turn to complete the UniSat connection and sign the transaction.

After completing the above steps, the user has bound the invitation code and can make deposits.

BTC Recharge

Various lock times can increase the user's HODL Score by 3 to 16 times. In the upper right corner, users can view their daily HODL Score based on different lock times and deposit amounts.

Enter the deposit amount and click "Deposit BTC". After signing the transaction, the user's deposit will be processed and you can see your score ranking on the leaderboard.

tBTC Minting and Recharge

When users mint tBTC, they need to use the BTC wallet address type supported by the project to deposit BTC into a wallet generated by Threshold Network, which is generated and signed by 51 of the 100 wallet signers. After the depositor sends the funds, the depositor's Ethereum receiving address is left. The tBTC bridge will check the Bitcoin network to ensure that the funds are consistent. If everything is normal, tBTC will be deposited into the user's Ethereum receiving address.

After completing the above steps, the user already has tBTC in the Ethereum wallet and can deposit it directly into the Mezo portal. After entering the invitation code, click on the top up tBTC, wBTC at the bottom of the page to go to the ERC-20 top-up page.

On the deposit page, users can choose whether to deposit tBTC or wBTC, select the type of BTC to be deposited and enter the amount, then click the "Deposit tBTC" button to complete the deposit. The page will display the user's HODL Score based on the deposit.

Financing and Development Roadmap

On April 9, Bitcoin's second-layer network Mezo completed a $21 million Series A financing round, led by Pantera Capital, with participation from Multicoin, Hack VC, Draper Associates, etc.

Mezo was launched by Thesis, a startup studio founded in 2014, and uses HODL Proof as a consensus mechanism. Users secure the network by locking BTC and MEZO tokens and validating transactions through CometBFT consensus. Users can lock BTC on Mezo, and the longer the deposit is locked, the higher the HODL score, which may be used as a weight for future airdrops. When the Mezo mainnet is launched, users can contribute to network security through HODL Proof and earn returns in return. Mezo was built to help cheaper and faster transactions without deviating from the basic principles of the network, thereby deepening the functionality of Bitcoin infrastructure.

According to the project documentation, Mezo is divided into three phases, and the project is currently in the first phase.

The first phase only invites early project partners to participate and launches wBTC and tBTC deposits on the Mezo portal, which sets a deposit cap.

The second phase of Mezo open community testing, HODL scoring begins, and cooperation with project partners is initiated. The TVL limit of the first phase will be increased, and more BTC address types will be supported to participate in deposits.

The third phase will launch the Mezo mainnet, which is expected to be launched in the second half of 2024, when MEZOTOKER will be launched with the mainnet, unlock TVL, settle the total HODL Score, and bridge TVL to the mainnet.