Bitcoin (BTC) Project Babylon took another step toward offering a decentralized funding (Defi) experience of its $ 5 billion stack protocol similar to what was seen elsewhere in the crypto.
The latest developments are the introduction of Trustless Vaults, designed to allow BTC holders to deposit their tokens without relying on a centralized unit, as described in a new White Book shared with Coindesk on Wednesday.
In defi -ecosystems, trustless vaults are a form of digital asset storage or management that removes the need for users to rely on a central authority or communicator. Instead, the systems use smart contracts to ensure security and enforce the rules of the vault.
Babylon says its vaults will allow Bitcoin to be used as security in Defi applications such as lending and stableecoin issuance, as well as the stake that its protocol delivers. Users can also earn benefits from their BTC holdings by setting it up to support the operation of Proof-of-Stake Network. They then receive rewards paid in baby, Babylon’s native token.
Development is part of the wider movement to exploit the enormous value kept in Bitcoin for power -defi activity across other blockchains.
Bitcoin, which accounts for over 60% of the total cryptocurrency-market cap, is worth being comfortably more than any other digitally active combined and could prove a far more potent source of blockchain-based fuel than any other crypto that exists.
Existing bridges that allow Bitcoin to be inserted into external blockchains are dependent on centralized third parties. In addition, Bitcoin’s scripting language does not allow covenants – mechanisms that allow specific conditions for how the funds can be used in the future – though not for a lack of trials from developers. Absence makes it harder to build trustless bridges.
Babylon suggests solving this by providing on-chain vaults, with the stored BTC tied to a particular smart contract protocol on an external chain.
This harness BitVM3, the latest development of BitVM, a framework to enable smart contracts on Bitcoin. BitVM3 is designed to improve the effectiveness of its predecessor by moving most of the calculation work off-chain using “confused circuits” to make fraud evidence more compact on-chain.
The trustless Bitcoin vaults are “programmable and withdrawals are only allowed when a zero-knowledge evidence of a specific smart contract mode is verified on the Bitcoin chain,” Babylon said in the paper’s abstract.
“Together with an appropriate Bitcoin -Criping -Design of the vault, this eliminates the need for mutual trust among the parties.”
Read more: The Crypto Exchange Kraken adds Bitcoin -Insert via Babylon as BTC -Driven Defi picks up
