Interlay introduces new protocol for Bitcoin’s reciprocal relationship with DeFi

Interoperability community Interlay has released a 21-page technical whitepaper, titled XCC: Theft-Resilient and Collateral-Optimized Cryptocurrency-Backed Belongings, advocating for the upcoming improvement of cross-blockchain interoperability options to unlock a plethora of potential throughout the decentralized finance (DeFi) ecosystem.

As a Polkadot (DOT) parachain, Interlay is focusing its efforts on opening pathways of communication and interplay between Bitcoin’s currency-native ecosystem and the broader functionalities of the DeFi area with networks corresponding to Ethereum (ETH) and Polkadot.

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The newly-launched XCC protocol — serving as an extra layer of XCLAIM, which was launched to the market in 2018 — permits higher asset sovereignty throughout cross-chain actions corresponding to wrapping, in addition to unifying Bitcoin multisigs with mechanisms sometimes native to the Ethereum community corresponding to commit chains.

To uphold the purported advantages of danger aversion and capital effectivity, the XCC asset will solely be out there inside curated DeFi functions, nonetheless, customers have the liberty to transition to the interBTC product in the event that they require higher flexibility. Each companies will exist in tandem with one another, increasing the capabilities of Bitcoin’s DeFi market to a wider shopper viewers.

In accordance with their evaluation, XCC ensures that “any Bitcoin that’s staked long-term and isn’t supposed to be moved can basically “launch” its collateral,” and that this will then be “reused to safe different, “liquid” BTC being bridged… permitting for vaults to serve extra customers with the identical collateral.”

Interlay co-founder & CEO Alexei Zamyatin shared his imaginative and prescient for the way forward for XCC by way of decentralized adoption in addition to a safety enhancement, stating:

“interBTC, aiming to change into the equal of DAI for BTC, already decentralized Bitcoin custody. Nevertheless, the aim at all times was to realize non-custodial BTC DeFi — a really onerous drawback to resolve. XCC units a milestone on this regard, lastly enabling theft resilient and easy-to-use Bitcoin DeFi.”

Associated: Interlay goals to advance Bitcoin’s DeFi potential with new interoperable bridge

A earlier recipient of a Web3 Basis grant, Interlay introduced progressions to their wrapped Bitcoin (wBTC) digital asset, kBTC, in mid-March, deploying the token onto their canary parachain Kintsugi.

Already supported on the Polkadot native parachain protocols Karura and Moonriver, the transfer instigates their preparations for upcoming deployment throughout Cosmos and Ethereum someday throughout the calendar 12 months.

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