Finance, Bitcoin, Bitvm, DeFi, Staking, News Central to the bridge is the YBTC token, pegged 1:1 with BTC, which enables BTC holders to engage in DeFi activities.
Bitlayer’s BitVM Bridge launched its mainnet on Wednesday, enabling bitcoin (BTC) liquidity for decentralized finance through a trust-minimized framework.
The bridge keeps users’ BTC safe by locking it in the BitVM smart contract that operates under the assumption that at least one honest market participant exists, ready to expose malicious attempts to move funds.
This trust-minimized setup starkly contrasts traditional custodians that involve centralized custody or distributed custodianship.
“Over the past year, we’ve dedicated significant resources to developing the BitVM bridge, and we’re thrilled to finally deliver this milestone to the community,” Bitlayer co-founder, Kevin He said in a press release shared with CoinDesk.
“Post-mainnet deployment, our focus shifts to scaling asset compatibility and deepening integration with additional blockchain networks,” He added.
YBTC, a gateway to BTC DeFi
Central to Bitlayer is YBTC, a token that directly represents the user’s locked bitcoin. Its value is pegged 1:1 with BTC, and it opens decentralized finance to BTC holders looking to generate additional yield by allowing them to stake, lend, borrow, trade and provide liquidity across multi-chain decentralized exchanges.
The token’s security stems directly from the transparent and verifiable BitVM smart contract – unlike wrapped BTC (such as WBTC), which relies on a trusted central entity to hold the actual BTC.
Note that YBTC is distinct from Bitlayer’s native token, BTR, which is used for governance, fees and staking within the ecosystem and is slated to be listed on major centralized exchanges.
Front-and-reclaim model
Typically, eliminating centralized custodians implies longer waiting times, especially in the case of fraud-proof systems like Bitlayer. Here, while transactions are assumed to be honest, anyone watching can step in to prove if something went wrong.
To allow enough time for these crucial security checks, there’s a built-in waiting period, typically seven days, during which a fraudulent transaction could be challenged. This can lead to longer withdrawal times.
However, Bitlayer employs an innovative “front-and-reclaim” model, transferring the waiting period to specialized brokers or third-party liquidity providers. These entities provide the withdrawn BTC from their own funds to users within approximately one hour. Meanwhile, they wait for their original seven-day security period to end before getting their funds back from the smart contract.
This approach offers both trustless security and a fast, convenient user experience.
“There is a front mechanism in BitVM bridge design, the pegout user will get their BTC back at bitcoin block time,” He told CoinDesk. “The waiting time will be left to the broker(operator).”
Expansive ecosystem
Bitlayer is prioritizing integration with the Ethereum mainnet and major layer 2 solutions, as well as exploring Solana and Bitcoin-native layer 2s, such as Lightning Network applications. It has already secured integration with other leading ecosystems, including Sui, Base, Starknet, and Arbitrum, Sonic, Plume Network and Sundial.
“Our goal is to make YBTC universally accessible wherever significant DeFi liquidity exists, enabling bitcoin to flow securely and seamlessly into diverse ecosystems,” BitLayer’s team told CoinDesk.
The team added that it plans to establish a security committee, release audit reports and conduct bug bounties and open-source their code, creating a roadmap that positions BitLayer’s BitVM Bridge as a crucial piece of infrastructure for BTC’s future in DeFi.
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