Architecture
The dlcBTC architecture bridges Bitcoin with other chains securely and efficiently, offering a transparent and verifiable process that eliminates intermediaries from the cross-chain bridging equation.
Unlike other wrapped Bitcoin solutions, such as wBTC, dlcBTC’s architecture is fully automated, making transactions 3-10 times faster. Furthermore, automation eliminates overhead costs, making dlcBTC cheaper by 25-50%.
The dlcBTC Mint/Redeem Flow
Pre-funding Transaction: A merchant initiates the process by creating a vault object on the destination chain (Ethereum, Arbitrum, etc.) and receives a unique ID for this vault.
Transaction Creation for Attestors: A Bitcoin Partially Signed Bitcoin Transaction (PSBT) is generated for depositing into the self-custodial dlcBTC network. The Bitcoin is locked into a 2-of-2 multisig between the user and the dlcBTC decentralized Attestor network, linked to the unique vault ID.
Attestor Relays: Attestors independently verify the transaction, ensuring its correctness and verifying the amount. If the vault is new or empty, attestors broadcast the transaction. If the vault already holds Bitcoin collateral, attestors use a threshold signature flow (FROST) to combine the old and new deposit into a new transaction, which is then broadcast. Each vault is represented by one Bitcoin transaction at any given time.
ERC20 Token Preparation: Once enough Bitcoin confirmations are received, attestors perform another threshold signing flow for the destination chain.
ERC20 Claim Process: With sufficient attestor agreement, they sign a transaction minting the dlcBTC token on the destination chain, directly owned by the user.
Transaction Conversion: The user can now utilize the minted dlcBTC within the DeFi ecosystem on the destination chain.
Token Redemption and BTC Release: To redeem Bitcoin, the user initiates the burn process, returning dlcBTC.
The Execution Phase: The merchant signs a PSBT to send some or all Bitcoin from the vault transaction back to their wallet, with any remainder sent to a new vault transaction. Attestors verify and sign this transaction, broadcasting it, and the Bitcoin is returned to the merchant's wallet.
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