Interpretation of the GOAT Network Economic Model White Paper: How to Activate the Trillion-Dollar Value Potential of Idle Bitcoin?

The GOAT Network aims to transform Bitcoin (BTC) from a passive storage asset into an active income-generating asset through innovative technology, thus unlocking its trillion-dollar potential value. The network introduces a decentralized Sequencer and a multi-currency PoS mechanism, using BTC transaction gas fees as the primary source of sustainable income, and integrates with BitVM2 and zkVM to ensure security. By tokenizing Sequencer earnings into tradable yBTC and yToken, the GOAT Network establishes an innovative BTC income market. This strategy not only addresses the security challenges of existing BTC Layer 2 but also provides holders of BTC and Dogecoin, among other "Renminbi species," a direct way to participate in the network and obtain stable returns.

Activating Sleeping Bitcoins: The Technological Innovation Goals of GOAT Network

Bitcoin has long been regarded as "digital gold," but its value mostly "sleeps" in wallets, making it difficult to generate income directly like Ethereum (ETH) or stablecoins. With the approval of the Bitcoin ETF in January 2024, the demand from mainstream financial institutions for Bitcoin-based financial products is increasing. GOAT Network has emerged to unlock the immense potential of Bitcoin, allowing all holders to benefit.

· Background Demand: Most BTC is idle, limiting its income-generating capacity. The market needs Bitcoin financial products with low volatility, downside protection, and dividends.

· Core Vision: Through decentralized Sequencer, multi-currency PoS (Proof-of-Stake), BitVM2, and zkVM and other technological innovations, transform BTC from a passive asset into an active asset.

Security Mechanism: Decentralization and Forfeiture

GOAT Network regards network security as a cornerstone, ensuring the integrity of the network through multiple technologies:

· Decentralized Sequencer: By sharing network ownership with external Sequencer node operators, the risk of single points of failure is reduced, ensuring the network's liveness 24/7.

· Slashability: As PoS assets, BTC, DOGE, and GOAT tokens are fully slashing. This mechanism incentivizes honest participation by punishing malicious behavior, thus maintaining network credibility.

· Zero-knowledge technology: Integrating BitVM2 design and internal zkVM technology to ensure privacy, security, and data integrity.

Sources of Revenue and Sustainability: Gas Fees and Multi-Currency PoS

The core of the economic model of the GOAT Network lies in the sustainability of its revenues, which primarily come from fees generated by basic activities of the network, rather than from speculative or one-time rewards.

sustainable BTC revenue sources

The income mainly comes from the transaction Gas fees paid by network users and the goatBTC minting/redeeming fees, which are paid in BTC.

· Gas fee: Users pay transaction and smart contract execution fees using goatBTC (the BTC Gas token on the GOAT Network). After collecting the Gas fee, the Sequencer pays a portion to the validators of the Bitcoin mainnet, while the other portion constitutes the Sequencer's revenue.

· Sequencer Revenue: Sequencer operators earn BTC Gas fees and mining rewards for maintaining network security and integrity. BTC or Dogecoin holders share this portion of the revenue by participating in PoS verification.

· goatBTC minting/redeeming fee: Users lock BTC on the mainnet and mint goatBTC pegged 1:1. The GOAT Foundation charges a small fee for redeeming goatBTC (e.g., 0.2%, capped at 0.002 BTC) for ecosystem development.

As Gas fees and minting/redeeming fees come from basic network activities, as long as the network exists, BTC earnings can be sustainable.

Multi-Currency PoS Mechanism: RMB Yield Chain

GOAT Network innovatively adopts a multi-coin PoS mechanism, initially supporting BTC and Dogecoin as PoS assets. In the future, the community will vote to decide on adding other People's Coins that meet the following criteria:

· Complete Decentralization and Dilution

· Market capitalization exceeds 10 billion dollars

· The number of addresses exceeds 1 million

· At least 3 years in the market

By allowing these "Renminbi varieties" to earn yields, the GOAT Network helps millions of users unlock the value of their holdings and solidifies its position as a sustainable BTC yield chain.

Tokenization of Earnings: yBTC, pBTC, and yToken Market

The tokenization of sequencer earnings is a key step in building the Bitcoin earnings market.

· Creation of yBTC: Investors supply goatBTC to the Sequencer node to mint yBTC (through a third-party platform), which is an interest-bearing token, pegged 1:1 to goatBTC and accumulates Sequencer rewards. yBTC is issued by the Sequencer or the Sequencer Alliance.

· Asset Decomposition: yBTC can be further decomposed into two synthetic assets:

· pBTC (Principal Token): Represents the principal portion of yBTC.

· yToken (Yield Token): All Sequencer rewards for holding yBTC within a specific period (e.g., 3 months, 6 months).

· Innovative Market: This decomposition mechanism creates an innovative BTC yield market, independent of the traditional lending market, deriving yields based on Sequencer revenue. It provides numerous trading opportunities for BTC providers, hedgers, arbitrageurs, and speculators, especially the ability to create interest-bearing Tokens with different maturity dates.

positive feedback loop

The generation of revenue drives a positive feedback loop, ensuring the growth and sustainability of the network:

Increased transactions → Higher Gas fees → Higher Sequencer profits → yBTC and yToken become more attractive → Attract more participants → Increased market activity → Higher Gas fees and profits.

Participant Roles, Incentives and Risks

Sequencer operator

· Functions: Verify transactions, maintain network security, run nodes to process and sort transactions.

· Rewards: Receive approximately 10% of the Sequencer rewards (including BTC Gas fees and mining rewards) as a service fee.

· Risks: Technical operational challenges; financial risks (must lock BTC, malicious actions may lead to asset confiscation); cybersecurity risks (DDoS attacks, hacking).

Stakers (holders of BTC or Dogecoin)

· Participation Motivation: Allowing retail investors to participate in L2 mining rewards addresses the issues of technical complexity and high capital requirements.

· Mechanism: Lock BTC on L1 to mint goatBTC, then supply goatBTC to the Sequencer in the L2 smart contract to obtain yBTC.

· Rewards: Share Sequencer revenue and the additional returns generated by yBTC within the ecosystem (such as providing liquidity).

· Risk: Malicious behavior by Sequencer leading to asset forfeiture; cross-chain bridging and smart contract risks (which can be mitigated through BitVM2 and zkVM). The GOAT Network also currently accepts BTCB (bridged from BSC) for supply.

The Future of GOAT Network: BTC Financial Market and Phase 2

BTC benchmark decentralized finance market

The enhanced security and sustainable yield mechanism of the GOAT Network aims to activate the BTC collateral market, establishing a decentralized financial market based on BTC, backed by BTC, with yields collected in BTC.

· Collateral applications: including lending (using collateral earnings to cover costs), synthetic assets (using BTC collateral to mint tokens representing other assets), stablecoins, and insurance products.

· Beyond Traditional Finance: Through smart contracts, the GOAT Network is able to achieve financial engineering that is difficult to accommodate in traditional finance, enhancing transparency, security, and efficiency.

GOAT Network Phase 2: Interoperability and Unified Liquidity

GOAT Network Phase 1 has successfully established a secure BTC L2 solution and a sustainable yield market. Phase 2 will focus on addressing the isolation issues of existing L1 and L2 applications.

· Entangled Rollup (ER) Technology: GOAT Network plans to introduce ER technology to achieve efficient cross-chain transactions, allowing native assets to move seamlessly between different blockchains while maintaining high throughput and low fees.

· Unified Liquidity: This will establish an interconnected and smooth ecosystem, enhancing liquidity and trading volume, attracting more dApp team collaborations, further increasing Gas fees, and reinforcing the positive feedback loop of profits.

Conclusion

GOAT Network, with cutting-edge technologies such as BitVM2, zkVM, and Decentralized Sequencer, not only addresses the core challenges of existing BTC L2 solutions in terms of security and yield generation but also establishes a unique and sustainable BTC yield market by tokenizing BTC yields. The network provides a participation and profit opportunity for a wide range of cryptocurrency holders by supporting PoS staking of BTC and "Renminbi seeds". As Phase 2 plans introduce Entangled Rollup technology for unified liquidity, GOAT Network is laying a solid foundation for building a scalable, secure, and interoperable BTC-based decentralized finance future.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make decisions with caution.