
Bitcoin’s success as a digital store of value is undeniable. Still, its utility beyond storage and transfer is a common point of criticism.
The Bitcoin (BTC) ecosystem relies on custodial, exogenous infrastructure to trade, lend against or issue derivatives of BTC. This is compounded by the fact that cross-chain bridges for the asset may be limited or have high custody risk.
Recent technical advances have spurred a flurry of developer activity in the Bitcoin L2 ecosystem. This may lead to an explosion of Bitcoin-native decentralized finance (DeFi) in coming years. As of October 2024, Ethereum dominates DeFi with about $47.5 billion in total value locked (TVL), while Bitcoin’s TVL lags at $1.9 billion. If Bitcoin captured just 10% of Ethereum’s market share, it could potentially add $4.8 billion in TVL. This highlights Bitcoin’s untapped potential in DeFi and the need for seamless cross-chain interoperability to close the gap.
Against this backdrop, projects such as Chainlink CCIP, LayerZero, Portal-to-Bitcoin and Threshold Network aim to bridge disparate blockchain environments. Portal-to-Bitcoin stands out by facilitating cross-chain operations through atomic swaps, which eliminate some custodial risk. Cointelegraph’s latest report examines Portal-to-Bitcoin’s approach to cross-chain swaps, which offers a unique solution to Bitcoin’s integration into DeFi ecosystems.
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.
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…
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