#Bitcoin is coming to Polkadot ecosystem

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Project Introduction

The BTC-Parachain allows users to mint 1:1 Bitcoin-backed assets onto Polkadot — PolkaBTC — and use these across a wide range of applications, including decentralized exchanges, stablecoins, and lending protocols.

History

The Interlay team is building a customized Substrate environment for interBTC, optimized to verify Bitcoin payments. The BTC Parachain includes a Bitcoin cross-chain SPV client (BTC-Relay), integrations with secure price oracles and XCMP, as well as support for hardware wallets. In addition, Interlay is also building client software for Vaults, Relayers (who make sure BTC-Relay is up to date), as well as an easy-to-use web interface.

Interlay has previously released a detailed technical specification and a working PoC implementation. After the successful pilot project, Interlay won a second Web3 Foundation grant to complete the BTC Parachain — the core milestones of this project were completed in March 2021.

Timeline So Far

  • (Soon) Interlay on Polkadot: Interlay is going to Polkadot parachain auctions in batch 2, starting December 23rd 2021
  • (Now) Kintsugi to Kusama: kBTC on Kusama and KINT airdrop planned before Christmas 2021.
  • Kintsugi wins 11th Kusama parachain slot on 13 October 2021
  • Feature-ready Beta launched on 2 March 2021
  • Alpha testnet launched in November 2020
  • 2nd Web3 Foundation grant (Full Implementation) started in September 2020
  • 1st grant completed in April 2020
  • 1st Web3 Foundation grant (Spec & PoC) started in January 2020
  • XCLAIM paper describing the tech underlying interBTC published in 2018

Key Features and Highlights

Mint and Redeem

Lock BTC to mint interBTC

A user (liquidity provider) mints new interBTC.

  1. A Vault locks DOT as collateral with the interBTC bridge (the Interlay BTC Parachain).
  2. A user creates an issue request with a collateralized Vault of his choosing. This reserves the Vault’s DOT collateral.
  3. The user then sends BTC to the Vault.
  4. The user proofs to the interBTC bridge that it send the BTC to the vault (using a transaction inclusion proof against the BTC Relay).
  5. Upon successful verification of the proof, the user mints interBTC and receives the tokens to his or her account balance.

High-level interBTC Issue process

Redeem interBTC for BTC

A user redeems interBTC for the equivalent amount of BTC or receives DOT as reimbursement.

  1. To request a redeem, a user locks interBTC with the interBTC bridge (Interlay BTC Parachain).
  2. The Parachain instructs a Vault to execute the redeem.
  3. The Vault transfers the correct amount of BTC to the user.
  4. To unlock the DOT collateral, the Vault submits a transaction inclusion proof to BTC-Relay.
  5. If the proof is correct, the Parachain releases the Vault’s DOTs.
  6. If no valid proof is provided on time, the Parachain slashes the Vault’s DOTs and reimburses the user at a beneficial exchange rate.

High-level interBTC Redeem process

Team Member

Alexei Zamyatin — Founder & CEO

Dominik Harz — Founder & CTO.

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