Sushi, the decentralized finance (DeFi) platform, has joined forces with interoperability platform ZetaChain to explore the potential for native Bitcoin swaps across 30 different blockchain networks.
This collaboration aims to allow users to trade BTC in a “native, decentralized, and permissionless manner” without the need for wrapping on various blockchains.
Sushi’s decentralized exchange (DEX) will be deployed on ZetaChain, integrating both its v2 and v3 automated market makers, as well as Sushi’s cross-chain swap, SushiXSwap.
ZetaChain’s core contributor, Ankur Nandwani, emphasized that this partnership could introduce Bitcoin’s extensive user base to the DeFi sector in a native manner.
He refuted arguments claiming that bridging BTC without wrapping on another chain is impossible, citing examples like THORChain that already trade Bitcoin natively with other chain assets.
Nandwani explained that ZetaChain’s approach allows anyone to build Bitcoin-interoperable decentralized applications (DApps) for settling contracts and transactions natively.
However, he acknowledged the necessity of trust assumptions, particularly regarding the decentralization of the network facilitating cross-chain transactions.
ZetaChain has successfully tested the technology on its testnet and plans to demonstrate its utility upon the launch of its mainnet through partnerships with SushiSwap and other DeFi protocols.
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Jared Grey, Sushi’s head chef, hailed the integration as a significant advancement for DeFi, describing the ability to swap Bitcoin natively as a “game-changer” for the industry.
He emphasized that this development opens up new possibilities for interoperability and enhanced connectivity within the DeFi ecosystem.
The integration between Sushi and ZetaChain will occur in two phases.
The first phase will see the introduction of a DEX on ZetaChain’s testnet to support basic asset swaps and liquidity provision, including beta testing and incentives for application testing.
Sushi will become one of ZetaChain’s launch partners when it deploys its mainnet, enabling full functionality for Bitcoin interoperability.
Nandwani detailed the technical process behind native BTC cross-chain swaps, explaining that a cross-chain swap contract is deployed on ZetaChain’s Ethereum Virtual Machine, allowing value to be passed to it from any connected chain, including Bitcoin.
Users initiate a cross-chain swap contract by sending a regular native token transfer transaction on Bitcoin with a special memo to a TSS address, containing the omnichain contract address on ZetaChain and the destination token and recipient address on the destination chain.
The TSS address is owned by ZetaChain’s signer validators, and once enough votes are cast, an inbound cross-chain transaction (CCTX) is created from Bitcoin to ZetaChain.
This leads to the minting of ZRC-20 BTC, which can then be swapped for other tokens on ZetaChain.
Finally, the destination token is withdrawn to the destination chain, concluding the decentralized and native BTC-to-ETH swap facilitated by ZetaChain’s network validators across connected chains.
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