Bitlon of the Bitcoin Project (BTC) took another step to offer a decentralized finance experience (DEFI) in its participation protocol of $ 5 billion similar to that seen in other parts of the cryptographic world.
The last development is the introduction of vaults without confidence, designed to allow BTC holders to deposit their tokens without trusting a centralized entity, as described in a new white paper shared with Coindesk on Wednesday.
In defi ecosystems, trust vaults are a form of storage or administration of digital assets that eliminates the need for users to trust a central authority or intermediary. Instead, systems use intelligent contracts to guarantee security and enforce the rules of the vault.
Babylon says that its vaults will allow Bitcoin to be used as a guarantee in defi applications, such as loans and stable issuance, as well as the participation provided by its protocol. Users can also obtain performance in their BTC holdings by betting it to support the operation of the stake test networks. Then they receive rewards paid in Baby, Babylon’s native file.
Development is part of the broader movement to use the enormous value held in Bitcoin to boost the defi activity in other blockchains.
Accounting more than 60% of the total limit of the cryptocurrency market, Bitcoin is comfortably more than any other combined digital asset and could demonstrate a much more powerful fuel based on blockchain than any other existing cryptography.
The existing bridges that allow Bitcoin to display in external blockchains depend on centralized third parties. In addition, the Bitcoin command sequences language does not allow agreements, mechanisms that allow specific conditions on how funds can be spent in the future, although not due to lack of developers. The absence makes it more difficult to build bridges without trust.
Babylon proposes to solve this by providing chain vaults, with the stored BTC linked to a specific smart contract protocol in an external chain.
This takes advantage of Bitvm3, the last evolution of Bitvm, a framework to enable Bitcoin intelligent contracts. Bitvm3 is designed to improve the efficiency of its predecessor by moving most of the computational work outside the chain using “confusing circuits”, to make fraud tests more compact in the chain.
The trusted bitcoin vaults are “programmable, and the withdrawals are allowed only when a zero knowledge test of a specific intelligent contract in the bitcoin chain is verified,” Babylon said in the summary of the document.
“Together with an appropriate design of Bitcoin command sequences of the vault, this eliminates the need for mutual trust between the matches.”
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