Introduction

This is the technical report for the Catalyst fund13 project “EUTxO L2 Interoperability”. It will be used to gather and introduce background information, but also as a delivery artifact for the various milestones.

The full list of milestones can be found here and the corresponding chapters in this document will contain documentation, instructions and links to other materials to reproduce or use our results in further work.

Background

Relevant research

• State Machines across Isomorphic Layer 2 Ledgers: The main research piece that this project evaluates - about so-called ad-hoc ledgers where individual transactions are performed across multiple L2 ledgers atomically.
  • See Logbook 2025-04-04 and Logbook 2025-03-25 for notes on the paper
• Interhead Hydra: Full virtual Hydra state channels
• SoK: Communication Across Distributed Ledgers: Overview of cross chain communication and generic model of such protocols.

Reading list

• CRATE: Cross-Rollup Atomic Transaction Execution: coordinates transactions spanning multiple rollups such that they execute in an all-or-nothing manner with 4-round finality on the Layer-1.
• Optimism’s Superchain Interoperability (2024)
• Cross-Rollup MEV: Non-Atomic Arbitrage Across L2 Blockchains

Hash Timelock Contracts (HTLC)

Setting up an HTLC allows the sender to lock an asset to be spent “accordingly” or it allows them to get back their funds after a timeout. Not much scripting is required for this construction, hence it is popularly used in Bitcoin Lightning to effectively forward payments between channels.

In Bitcoin Lightning, HTLCs are also used to swap into and out of lightning channels from the Bitcoin main chain. These atomic swaps are called Submarine Swaps and are fully trustless (no custody, no counterparty risk) because they share the same underlying chain / security model (= Bitcoin).

Adaptor signatures

Originating from ideas on Scriptless scripts where correct execution of scripts is captured by the validity of digital signatures (elliptic curve based schemes), so-called adaptor signature schemes can be used to reveal information through the actual signature. Verifiably Encrypted Signatures (VES) are a generalization of this concept onto both Schnorr and ECDSA signature schemes.

Related work about cross-chain atomic swaps between Bitcoin and Monero suggests that adaptor signatures can be used to realize unlocking on even very constrained target chains (Monero). We are in a much more comfortable position of very scriptable ledgers.

Quite low-level treatment on the signature schemes: https://medium.com/crypto-garage/adaptor-signature-schnorr-signature-and-ecdsa-da0663c2adc4