Bitcoin Optech Newsletter #428

This week's Bitcoin Optech Newsletter #428 details a new design called Lichen for a single-issuer layer 2 solution. Lichen enables users to redeem their bitcoin onchain even if the issuer, termed a "hub," is uncooperative or offline. The design involves the hub minting tokens redeemable one-to-one for bitcoin on a layer 2 ledger operated by a "sequencer." Users secure their funds via a 2-of-2 multisig contract with the hub, ensuring trust-minimized exits. Building on LN-GAP, Lichen replaces the attestation committee with an onchain dispute mechanism. Each user locks bitcoin into their dedicated 2-of-2 output with the hub, receiving an equivalent amount of layer 2 tokens. The hub also locks a portion of its own bitcoin in these outputs, up to a negotiated cap, to facilitate redemptions of tokens received from other users. In cooperative exits, the hub simply signs a settlement. For uncooperative or unresponsive hubs, users can generate a Groth16 proof demonstrating the sequencer signed a state recording the returned tokens, which is then claimed onchain. The newsletter also covers a proposal for including hash preimages in output script descriptors and provides updates on Bitcoin services, client software, and infrastructure.