Nov 17, 2023

Exploring Ethereum Crypto with ZetaChain: Testing Native Bitcoin DeFi Swaps

Ethereum crypto example of Web 3.0: ZetaChain testing native Bitcoin DeFi swaps.
Sushi taps into ZetaChain to begin testing native Bitcoin DeFi swaps

Exploring Native Bitcoin Swaps Across 30 Blockchains

DeFi platform Sushi has teamed up with interoperability platform ZetaChain to explore the possibility of providing native Bitcoin swaps to its users across 30 different blockchains.

The integration is set to enable trading of BTC without wrapping it across several blockchains in a decentralized, permissionless, and native manner, and will involve Sushi’s v2 and v3 automated market makers and SushiXSwap cross-chain swap.

Ankur Nandwani, a core contributor to ZetaChain, told Cointelegraph that the partnership could bring Bitcoin’s large user base to the DeFi sector in a native way. He also argued against the notion that bridging BTC without wrapping the assets on another chain is impossible.

Examples of Web 3.0 Technology

THORChain is one of the first examples of Web 3.0 technology, allowing users to trade Bitcoin natively with other blockchain assets. Bitcoin side chains also offer a similar experience. ZetaChain’s approach allows developers to build Bitcoin-interoperable decentralized applications (DApps) that can settle contracts and transactions natively.

The technology has been tested at a testnet level and is set to launch its mainnet with the help of partnerships with SushiSwap and other DeFi protocols. Sushi’s head chef Jared Grey has praised the integration and believes that the capability to swap Bitcoin natively is a “game-changer” for the industry.

Sushi and ZetaChain Integration

The integration of Sushi and ZetaChain is planned in two stages. The first stage will bring a decentralized exchange on ZetaChain’s testnet, which will enable basic asset swaps and liquidity provision. This phase will also involve beta testing and incentives for application testing.

When ZetaChain launches its mainnet, Sushi will be one of its launch partners. After the launch, it will be possible to use Bitcoin interoperability with full functionality. Nandwani explained the technical details regarding the functionality allowing for native BTC cross-chain swaps.

A cross-chain swap contract is deployed on ZetaChain’s EVM (Ethereum Virtual Machine). This contract is omnichain, which means that while it is deployed on ZetaChain, it can be called and the value can be passed to it from any connected chain, including Bitcoin.

In order to call a cross-chain swap contract, a user needs to send a regular native token transfer transaction on Bitcoin with a special memo to a TSS address. The memo should contain the omnichain contract address on ZetaChain, the value passed to the contract (e.g. ETH or USDC on Ethereum) and the recipient address on the destination chain.

Web 3.0 Examples

The TSS address owned by ZetaChain signer validators is an example of Web 3.0 technology. When BTC is transferred to this address, it is locked and validators cast a vote about this event on ZetaChain. If enough votes are cast, an inbound cross-chain transaction (CCTX, from Bitcoin to ZetaChain) is created.

A ZRC-20 BTC is then minted as a result of the CCTX and is swapped for ZRC-20 of another token, such as ZRC-20 ETH. ZRC-20 ETH is then withdrawn to the destination chain, and native ETH is transferred from the TSS address on Ethereum to the recipient. This example of Web 3.0 illustrates how native BTC can be swapped for native ETH in a decentralized manner facilitated by ZetaChain’s network validators across connected chains.

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