Bitcoin as Collateral

The biggest market in crypto, even today, is still Bitcoin. It’s the only truly decentralized digital asset.

But Bitcoin, by itself, isn’t enough – it needs to have smart contracts for uses like lending and currency hedging.

A trillion dollars of Bitcoin capital is waiting to use native Bitcoin in smart contracts. Why is Bitcoin so important?

It’s the only truly safe, decentralized digital asset. Bitcoin builds on decades of cryptographic research so it’s more resistant to hacks by far.

Think about it, where would you rather put your savings: into something that was developed by the best of the best in academia over decades, or into something that was built quickly and with a small engineering team?

Even in the early days of crypto that we’re living in today, hacks and other custodial mistakes have led to over $40Bn in losses. Imagine what that will look like once the sector grows 100X.

Escrow is the Safest Solution

Since Bitcoin is digital, it does have a programmable interface. But today, in order to use it for DeFi, you have to wrap the Bitcoin, meaning that you entrust a third-party with its custody.

Governments and large corporations are keen to use Bitcoin in more ways but can’t risk it, since even the most reputable custodians are subject to human error and hacking.

The way to get around this is through escrow contracts. In the finance world, secure transactions require escrow to eliminate counterparty risk.

And that escrow needs to be trust-minimized, so the escrow contracts themselves need to be decentralized as well. Discreet Log Contracts, or DLCs, are the missing piece.

DLCs Enable Secure Bitcoin Escrow

DLCs are special multisig wallets where one of the parties is an oracle that independently referees the outcome. Smart contracts lock and unlock Bitcoin by communicating with these oracles.

As dlcBTC, we provide the infrastructure that runs this layer. To make it decentralized, we’re building a network where independent node operators run the attesters and get paid in our ecosystem token.
This layer enables new types of self-custodied DeFi applications that weren’t possible before.

For example, dlcBTC (an ERC20 token compatible with the Ethereum Virtual Machine) allows users to lock Bitcoin in escrow, creating a secure, non-custodial wrapped Bitcoin solution.

A smart contract tracks Bitcoin collateral and ensures its safe usage in decentralized financial protocols. When users wish to redeem their Bitcoin, they can easily unlock it without relying on third-party custodians.

This innovation marks a transformative step for Bitcoin in DeFi, offering a trust-minimized way to interact with decentralized platforms while maintaining self-custody of assets.

Our broader vision is to use this layer to connect all blockchains to smart contracts on Bitcoin. Every chain will want to use native Bitcoin in their systems, which for us leads to tremendous network effects.

Similar to how Chainlink captured market share for price feed oracles, we’ll grow to be the dominant force for DLC attesters on Bitcoin.

In traditional finance, escrow is a financial primitive that powers the global derivatives market worth $1 Quadrillion, so we’re talking about an addressable market for escrowed apps in the Trillions.

There are hundreds of use cases for escrow in traditional finance, and each of these use cases are multi-Billion-dollar markets in their own right, meaning that we see thousands of applications to be built on top of our infrastructure.

About dlcBTC

As a decentralized wrapped Bitcoin, dlcBTC leverages Discreet Log Contracts (DLCs) and Chainlink's Cross-Chain Interoperability Protocol (CCIP) to provide a theft-proof bridge to cross-chain DeFi, backed by the security of the Bitcoin network. dlcBTC unlocks yield for your Bitcoin in DeFi with the benefit of lower fees and merchant self-custody, empowering users to put their Bitcoin to work.

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