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Edited by Samiksha at 26-12-2023 12:58 PM
DeFi platform Sushi is collaborating with interoperability platform ZetaChain to explore the possibility of enabling its users to exchange local Bitcoin across 30 different blockchain networks. Sushi's deployment of a decentralized exchange (DEX) on ZetaChain is touted as the ability to facilitate BTC transactions without crossing multiple blockchains, referred to by the team as a "local, decentralized, and permissionless"approach. The integration will include Sushi's v2 and v3 automated market makers and Sushi's cross-chain exchange, SushiXSwap.
Ankur Nandwani, a core contributor to ZetaChain, told Cointraphicle that this partnership could organically bring Bitcoin's substantial user base into the DeFi space. He also countered arguments that bridging BTC without wrapping assets on another chain is impossible, citing early examples like THORChain that are facilitating local Bitcoin transactions with other chain assets.
Nandwani stated, "Early examples like THORChain have emerged, and they are facilitating local Bitcoin transactions with other chain assets. Other methods such as Bitcoin sidechains also provide a flavor." He added that ZetaChain's approach effectively allows anyone to build Bitcoin interoperable decentralized applications (DApps) that can settle contracts and transactions locally.
"Of course, there is also the assumption of trust—trusting the decentralized nature of the network facilitating these cross-chain transactions," Nandwani added.
Reportedly, ZetaChain has proven this technology on the testnet and will demonstrate its practicality upon the mainnet launch through collaborations with SushiSwap and other DeFi protocols.
Sushi's head chef, Jared Grey, praised the integration as a significant advancement for DeFi, describing the capability of local Bitcoin exchange as a "game-changer" for the industry. "This is not just about increasing Bitcoin liquidity but marks the beginning of a new chapter in DeFi, where we see more practical use cases of interoperability and enhanced connectivity," Grey commented.
The integration of Sushi and ZetaChain will occur in two phases. In the first phase, Sushi will introduce the DEX on ZetaChain's testnet to support basic asset swaps and liquidity provision. This stage will also include beta testing and application testing incentive measures.
Sushi will become one of ZetaChain's launch partners when deploying its mainnet. It is expected that after this release, Bitcoin interoperability will be fully realized. Nandwani outlined the technical details behind the functionality allowing local BTC cross-chain exchanges.
Cross-chain exchange contracts are deployed on ZetaChain's Ethereum Virtual Machine (EVM). The contract is chain-agnostic, meaning that when deployed on ZetaChain, it can be invoked, and value can be transmitted from any connected chain, including Bitcoin.
Invoking the cross-chain exchange contract requires users to send a standard Bitcoin local token transfer transaction with a special memo to a TSS address. The memo includes the full-chain contract address on ZetaChain and the value passed to the contract. For cross-chain exchanges, the value will be the target token, such as ETH or USDC on Ethereum, and the recipient address on the target chain.
Related: Bitcoin Could Be the Foundation for DeFi With More Single-Sided Liquidity Pools
The TSS address is owned by ZetaChain signatory validators. BTC transferred to the TSS address is locked, and validators observe this transfer, voting on this event on ZetaChain. If enough votes are cast, it is considered observed, and an inbound cross-chain transaction (CCTX, from Bitcoin to ZetaChain) is created.
Once the CCTX is processed, a ZetaChain OminChain contract is called, and the BTC amount transferred to the TSS address is minted as ZRC-20 BTC. During the execution of the cross-chain exchange contract, ZRC-20 BTC is exchanged for another token's ZRC-20, such as ZRC-20 ETH.
ZRC-20 ETH is ultimately withdrawn to the destination chain. During the withdrawal process, ZRC-20 ETH is burned, creating an outbound CCTX from ZetaChain to Ethereum. Observer validators vote on this CCTX on ZetaChain. Once the outbound CCTX is processed, local ETH is transferred from Ethereum's TSS address to the Ethereum recipient.
Nandwani provided this example to outline how local BTC can be exchanged for local ETH in a decentralized manner through ZetaChain's network validators on the connected chain. |
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Post time 20-11-2023 13:59:23