Alisa Davidson
Published: January 17, 2025 at 4:18 am Updated: January 17, 2025 at 4:18 am
Edited and fact-checked:
January 17, 2025 at 4:18 am
In Brief
Bitlayer has launched the “Finality Bridge,” allowing users to convert BTC into YBTC with minimal reliance on intermediaries and enabling greater participation in liquidity mining, staking, and lending within its ecosystem and beyond.
Layer 2 scaling solution for Bitcoin, Bitlayer announced the launch of its trust-minimized bridge, the “Finality Bridge,” which allows users to securely convert BTC into YBTC with minimal reliance on intermediaries, enabling broader participation in decentralized finance (DeFi) activities such as liquidity mining, staking, and lending within the Bitlayer ecosystem and beyond.
The Finality Bridge is designed to facilitate the seamless integration of Bitcoin into the Bitlayer network, ensuring that BTC can be utilized in a decentralized and programmable financial environment. Operating alongside the Bitlayer rollup, the bridge prioritizes both security and efficiency in Bitcoin transfers. At its core, the protocol leverages a combination of BitVM smart contracts, fraud proofs, and zero-knowledge proofs to maintain trust minimization and transaction integrity.
YBTC, the token issued through the Finality Bridge, serves as a trust-minimized representation of Bitcoin within smart contract-based ecosystems. When users lock BTC into a BitVM smart contract, they receive an equivalent amount of YBTC on the Bitlayer rollup or other supported environments. Each YBTC maintains a strict 1:1 peg with Bitcoin, ensuring that it remains a secure and reliable asset rather than a derivative. This structure reinforces YBTC’s stability, backed by the trust-minimized framework of the BitVM smart contract, allowing Bitcoin to be actively used in decentralized applications (dApps) while preserving its intrinsic value.
How Does The Finality Bridge Function?
The Finality Bridge operates through a structured protocol that governs interactions between participants and two key smart contracts—one deployed on Bitcoin and the other on the target blockchain. This dual-contract architecture enables Bitcoin to be securely transferred into programmable environments, utilizing a trust-minimized framework to ensure both security and efficiency.
The protocol is supported by multiple participant roles, each essential to the smooth operation of the bridge. A Peg-in User is a Bitcoin holder who deposits BTC into Bridge Contract A on Bitcoin and mints an equivalent amount of YBTC on Bridge Contract B, which is deployed on the target chain. Each bridge instance has a single peg-in user. In contrast, a Peg-out User holds YBTC and burns their tokens on Bridge Contract B to withdraw an equal amount of BTC from Bridge Contract A. The number of peg-out users corresponds to the total number of withdrawal transactions initiated from Bridge Contract A.
A Broker acts as an intermediary, providing short-term liquidity to facilitate peg-out requests. By fronting the required funds to peg-out users, brokers ensure smooth transactions and later reclaim the equivalent BTC from Bridge Contract A while earning a service fee. Meanwhile, a Vigilante is a network participant responsible for monitoring on-chain activity to detect fraudulent behavior, such as invalid fund reclamation attempts. When necessary, vigilantes initiate challenges to uphold the integrity of the protocol and prevent unauthorized transactions.
The protocol relies on two key smart contracts to function effectively. Bridge Contract A, deployed on Bitcoin, serves as the trust-minimized custodian of locked BTC for each bridge instance. This contract forms the core of the Finality Bridge’s security model and is built using the BitVM smart contract framework. Rather than operating as a single, monolithic contract, it consists of independently deployed contract instances, each created on demand for a specific bridge instance. Bridge Contract B, deployed on the target blockchain, such as the Bitlayer rollup, acts as the management console for YBTC, overseeing its issuance and interaction within the ecosystem.
As the Bitcoin ecosystem evolves, the Finality Bridge represents a notable step toward enhancing Bitcoin’s interoperability with the broader blockchain landscape. By integrating Bitcoin’s security model with cryptographic innovations, the bridge enables more scalable and trustless solutions. This approach not only expands Bitcoin’s role in DeFi but also reinforces the principles of decentralization and transparency, ensuring seamless integration with the growing blockchain ecosystem.
Bitlayer functions as a Layer 2 protocol built on BitVM, combining the security of Bitcoin’s blockchain with Turing completeness for more versatile programming capabilities. The project has established itself as a notable player in the DeFi space, with a total value locked (TVL) exceeding $439 million, according to DeFiLlama.
Disclaimer
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
More articles
Alisa Davidson
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
More articles
