The success of Bitcoin (BTC) as a digital store of value is undeniable, but its utility beyond storage and transfer is often criticized. The Bitcoin ecosystem relies heavily on custodial, exogenous infrastructure to trade, lend against, or issue derivatives of BTC. This is compounded by the limited availability of cross-chain bridges for the asset, which can pose high custody risks.
The State of DeFi in 2024
As of October 2024, Ethereum dominates the decentralized finance (DeFi) landscape with approximately $47.5 billion in total value locked (TVL), while Bitcoin’s TVL lags behind at $1.9 billion. If Bitcoin were to capture just 10% of Ethereum’s market share, it could potentially add $4.8 billion in TVL, highlighting the untapped potential of Bitcoin in DeFi and the need for seamless cross-chain interoperability.
Projects Bridging Disparate Blockchain Environments
Several projects, such as Chainlink CCIP, LayerZero, Portal-to-Bitcoin, and Threshold Network, aim to bridge disparate blockchain environments. Among these, Portal-to-Bitcoin stands out by facilitating cross-chain operations through atomic swaps, which eliminate some custodial risk.
Portal-to-Bitcoin: A Native Bitcoin Solution for Cross-Chain Non-Custodial Swaps
Portal-to-Bitcoin is a protocol that introduces a solution for swapping native Bitcoin cross-chain without the need for wrapped assets or custodial bridges. Its architecture avoids conventional lock-and-mint models and relies on atomic swaps, specifically Multi-Party Hash Time-Locked Contracts (MP-HTLCs) to facilitate swaps.
How Portal-to-Bitcoin Works
When a user initiates a swap, funds are locked in an HTLC on one blockchain (e.g., Bitcoin network), and the counterparty creates a matching HTLC on another chain (Ethereum network). Both contracts rely on the same cryptographic hash and enforce a time limit for the swap to complete. If either party reveals the shared secret (preimage), the swap finalizes; otherwise, both parties recover their assets.
The Automated Dynamic Market Maker (ADMM)
Portal-to-bitcoin uses an ADMM to match users’ swaps. The ADMM is similar to Uniswap v3 but designed to manage liquidity and execute swaps efficiently across chains. This system can process range and market orders, minimizing costs and front-running risks by batching transactions per block.
Security and Validation
Portal-to-bitcoin operates a validator-based system that is supported by its unique Notary Chain. The Notary Chain uses a Threshold Signature Scheme (TSS) to ensure that no single validator can control critical cryptographic keys. Although there is still a degree of trust required, the distributed structure ensures that no small subset of validators can misappropriate funds.
Charting a Course for Bitcoin’s DeFi Evolution
By solving the key issues of trust and custody, Portal-to-Bitcoin presents a viable solution for Bitcoin’s broader cross-chain DeFi integration. This potentially unlocks significant value in the space. An in-depth dive into various cross-chain technologies and full insight into Portal to Bitcoin’s unique architecture can be found in the full version of the report.
Download the Full Report
To learn more about Portal-to-Bitcoin and its innovative approach to cross-chain swaps, download the full report for free here: .
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