Trustless Bitcoin Vault — Overview
The Problem
Only ~1% of Bitcoin participates in DeFi today. Why? Because traditional approaches require Bitcoin holders to surrender their native Bitcoin to a custodian (bridge, wrapper, or validator set) in exchange for synthetic tokens. This custodian has full control and can potentially seize the assets—an unacceptable trust requirement for most Bitcoin holders.
The Solution
Trustless Bitcoin Vault (TBV) is a protocol that enables native Bitcoin to participate in DeFi without bridges, wrappers, or trusted custodians. Your Bitcoin stays on the Bitcoin blockchain in a self-custodial vault while smart contracts on DeFi chains can programmably control its ownership.
With TBV, using native Bitcoin in DeFi becomes as safe as using ETH in DeFi.
What is a Vault?
A vault is not a shared capital pool. In TBV:
- Your Bitcoin stays on Bitcoin: Locked in a Bitcoin script you create—no bridging or wrapping into synthetic tokens
- Segregated, not pooled: Each vault is isolated. Your Bitcoin is never co-mingled with others' funds
- No rehypothecation: Your vault cannot be used by anyone else as their collateral
- Programmable ownership: Smart contracts define who can claim your Bitcoin and under what conditions
Use Cases
TBV transforms Bitcoin into programmable collateral for any DeFi application:
- Bitcoin-backed lending: Use BTC as collateral for loans without giving up custody
- Bitcoin-backed stablecoins: Mint stablecoins with native BTC backing
- Bitcoin options: Collateralize call/put options with your Bitcoin
- Insurance: Use BTC as reserve capital for on-chain insurance products
How It Works
TBV uses cryptographic techniques to translate DeFi smart contract execution into something the Bitcoin blockchain can understand and act upon:
- Zero-knowledge proofs (SNARKs) verify that smart contract conditions were met
- Bitcoin scripts enforce the ownership rules on the Bitcoin side
- Challenge mechanisms ensure fraudulent claims can be disputed
The result: ownership transfers are enforced by cryptographic proofs and code, not trusted parties.
Why It's Trustless
What you do NOT need to trust:
- Custodians or bridges: There are none. Your Bitcoin is self-custodied
- Indexer nodes: A compromised indexer cannot steal funds—proofs validate the data
- Prover operators: A malicious prover cannot produce a valid proof for a false claim
What you DO need to trust (minimal surface):
- The DeFi chain: Its consensus must execute the smart contracts correctly
- Verification parameters: The cryptographic setup must be generated transparently
Architecture
The system is composed of modular, decoupled components:
| Component | Purpose |
|---|---|
| Indexer | Tracks Bitcoin network state (blocks, transactions, UTXOs) |
| Prover | Generates zero-knowledge proofs that smart contracts can verify |
| Vault Contracts | Verifies proofs on the DeFi chain and enforces ownership rules |
| Core Runtime | Coordinates vault creation, key management, and proof workflows |
Security
TBV is designed to minimize attack surface:
| Threat | Mitigation |
|---|---|
| Forged proofs | Contracts cryptographically verify all proofs; invalid proofs are rejected |
| Compromised indexer | Multiple indexers can cross-validate; provers verify data consistency |
| Chain reorganizations | Proofs include block height checks; contracts require sufficient confirmations |
| Malicious claims | Challenge period allows disputes; fraudulent claims can be blocked |