General-Layer BTC(GL-BTC)
Last updated
Last updated
DolaProtocol is our innovative cross-chain liquidity protocol, with the core objective of building a comprehensive cross-chain liquidity aggregation and settlement system. Building on this foundation, we have successfully developed a cross-chain lending protocol, enabling users from different blockchain networks to provide liquidity and participate in cross-chain lending activities, thereby promoting liquidity circulation among various ecosystems. With the approval of Bitcoin ETFs, Bitcoin's status has gained wider recognition. However, the Bitcoin network lacks Turing completeness and does not support smart contracts, which limits its application potential in the rapidly evolving blockchain space. Multiple blockchain platforms have introduced different versions of wrapped Bitcoin to fully leverage Bitcoin's value, such as WBTC, TBTC, and the BTC issued on our BEVM chain. These different versions of Bitcoin have inevitably led to the fragmentation of liquidity. To address this challenge, we propose creating GL-BTC by extending DolaProtocol. GL-BTC is a unified Bitcoin representation that integrates various Bitcoin variants from different chains. The initiative aims to aggregate Bitcoin liquidity and achieve seamless cross-chain circulation of GL-BTC through cross-chain bridges like Layerzero and Wormhole. Through this approach, we are committed to enhancing Bitcoin's utility and accessibility across the entire blockchain ecosystem, providing users with a more flexible and efficient Bitcoin usage experience.
Inheriting from DolaProtocol's design, we establish independent single-asset pools for various BTC variants (such as WBTC, TBTC, etc.) on different blockchains. These single-asset pools are uniformly managed through DolaProtocol's central settlement system, ensuring effective coordination and liquidity optimization of cross-chain assets.
The cross-chain bridge is a crucial component of the system, responsible for handling inter-chain communication from various single-asset pools. Utilizing advanced cross-chain messaging protocols such as Wormhole and Layerzero, the bridging module can securely and efficiently complete the transmission and validation of cross-chain messages. This ensures seamless circulation and interoperability of GL-BTC across different blockchain networks.
After users deposit different types of BTC, the protocol needs to wrap them into unified GL-BTC. Considering the subtle price differences between various BTC variants and native BTC, we adopt an over-collateralization model similar to MakerDAO to address this issue. The specific steps are as follows:
Set specific over-collateralization ratios for each BTC variant based on its price relationship with native BTC and risk assessment.
Users deposit BTC variants as collateral.
The system calculates the amount of GL-BTC that can be issued based on the current market value of the collateral and preset collateralization ratio.
Mint and issue the corresponding amount of GL-BTC on the user-specified target chain.
This method not only avoids arbitrage risks associated with direct exchange rate setting but also provides a more flexible and secure asset management mechanism.
After adopting a CDP (Collateralized Debt Position) model similar to MakerDAO, the GL-BTC redemption process is as follows:
Users can repay their GL-BTC debt on any supported blockchain.
After repayment is complete, users can choose to redeem their originally deposited BTC variant.
The system verifies the debt repayment status and releases the user's collateral on the corresponding original chain.
Users recover their originally deposited BTC variant.
The stability and security of the GL-BTC system are our primary considerations. To this end, the protocol implements comprehensive liquidity management and risk control strategies. Core mechanisms include dynamic adjustment of collateralization ratios, liquidation procedures, and liquidity incentives. The system continuously monitors market conditions for various BTC variants, automatically adjusting collateralization ratios to adapt to market fluctuations. When the collateral value drops below a predetermined threshold, smart contracts automatically trigger liquidation procedures to ensure the system's solvency. Risks associated with cross-chain operations are also a key area of focus. We have established a real-time cross-chain monitoring system, set limits for single and cumulative cross-chain transfers, and equipped the system with an emergency pause mechanism. These measures collectively form a defense line, effectively reducing potential risks in cross-chain operations. In terms of smart contract security, we conduct regular third-party security audits and implement upgradeable contract mechanisms to ensure rapid response when issues are discovered. Considering the risk of potential vulnerabilities in some BTC variants that could lead to asset theft, the protocol adopts targeted risk control measures. Firstly, we implement a timely liquidation mechanism. Once severe vulnerabilities or abnormal activities are detected, the system immediately triggers the liquidation process for the relevant assets. Secondly, we set differentiated debt ceilings for different BTC variants and dynamically adjust them. This not only limits the risk exposure of single assets but also sets a global debt ceiling for the entire system, effectively controlling overall risk. To further enhance the system's risk resistance, we have adopted risk isolation strategies and insurance mechanisms. By establishing independent asset pools for different BTC variants, we effectively prevent risk contagion. Additionally, we have established risk reserves and insurance funds to provide additional buffers for potential losses. Lastly, we have introduced community governance mechanisms, allowing users to participate in risk assessment and management. This not only increases the system's transparency but also provides a broader perspective for risk identification and response.
By innovatively integrating Bitcoin variants from different blockchains, GL-BTC not only resolves the issue of fragmented Bitcoin liquidity but also provides users with a secure and efficient cross-chain Bitcoin experience. This breakthrough solution will significantly optimize Bitcoin's overall liquidity, improve capital efficiency, and bring unprecedented cross-chain interoperability to users. The multi-layered risk control mechanism adopted by GL-BTC offers robust protection for user assets while opening up new possibilities for the development of the DeFi ecosystem. As GL-BTC is promoted and applied, it will become a crucial bridge connecting Bitcoin with the broader DeFi world, greatly enhancing Bitcoin's utility and value as a digital asset.
