Details

iBTC redefines BTCFi by offering a bridgeless, self-wrapped, trust-minimized wrapped Bitcoin solution. Unlike traditionally wrapped tokens that rely on centralized custodians or vulnerable cross-chain bridges, iBTC secures BTC directly on Bitcoin Layer 1 using a 2-of-2 multisig vault system. Designed for institutional-grade security and liquidity, iBTC enables seamless DeFi access across multiple chains while ensuring transparency and user control.

How iBTC Works

iBTC’s protocol seamlessly converts Bitcoin into a DeFi-ready asset without bridges or custodians. Here’s the process, leveraging Bitcoin Layer 1 security and Ethereum smart contracts:

  1. Lock BTC

    1. Action: Merchants deposit BTC into a 2-of-2 multisig vault on Bitcoin Layer 1.

    2. Security: The vault requires signatures from both the merchant (KYB-verified) and the Attestor Network, preventing unilateral control.

  2. Attestation & Confirmation

    1. Action: The Attestor Network, a decentralized group of node operators, monitors the Bitcoin blockchain to confirm the deposit.

    2. Validation: Attestors use FROST (Flexible Round-Optimized Schnorr Threshold Signatures) to co-sign the deposit, requiring a quorum (e.g. 10-of-15 attestors).

    3. Efficiency: FROST reduces signature size (~100 bytes vs. 500+ bytes in traditional multisig), lowering transaction costs.

  3. Mint iBTC on the Selected Chain

    1. Action: Once confirmed, the Attestor Network triggers the AttestorManager smart contract (Ethereum, Arbitrum, etc.) to mint iBTC on the target chain.

    2. Ratio: 1 BTC = 1 iBTC, ensuring a 1:1 peg.

    3. Supported Chains: Ethereum, Arbitrum, Optimism, Base, XRPL.

    4. Contract: AttestorManager handles minting events, ensuring no over-minting (audited regularly).

  4. Redeem BTC

    1. Action: Users burn iBTC via their merchant or qualified custodian (QC), triggering a redemption event.

    2. Validation: Attestors confirm the burn, co-sign a PSBT (Partially Signed Bitcoin Transaction), and release BTC from the vault.

    3. Speed: Redemption completes in ~60 minutes (6 confirmations), compared to 3-12 hours for traditional wrapped BTC.

Why iBTC?

Bitcoin wrapping solutions that aim to allow users to gain liquidity and functionality out of their Bitcoin face great counterparty risk. For example, Wrapped Bitcoin - wBTC - is backed 1:1 with native $BTC and custodied by BitGo, an independent third -party entity. Though custodians promise to safekeep the Bitcoin, this introduces significant counterparty risk. Wrapped Bitcoin in particular suffers from a number of risks including blackbox, censorship, and regulatory risk. In other words, wBTC is a centralised solution with one point of failure.

iBTC uses multiple decentralized attestors and a self-custodial model to secure the $iBTC network ensuring no central point of failure.

NextUtilities

Last updated