iBTC Network Documentation
  • Overview
  • Protocol
    • What is iBTC?
    • How iBTC Works
    • Attestor Network
    • Merchant Network
  • Security
    • Core Security Features
    • Proof of Reserves
    • Audit Reports
  • Yield & Rewards
    • Yield Opportunities
    • iBTC Rewards Program
  • Usage
    • Getting iBTC
    • Redeeming iBTC
  • Ecosystem
    • Supported Chains
    • Comparisons
    • Contract Addresses
  • Community & Support
    • FAQs
    • Contact Us
    • Glossary
  • Team
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On this page
  • Minting iBTC from BTC
  • Redeeming BTC from iBTC
  1. Protocol

How iBTC Works

From BTC to DeFi in Four Secure Steps

PreviousWhat is iBTC?NextAttestor Network

Last updated 10 days ago

iBTC’s protocol seamlessly converts Bitcoin into a DeFi-ready asset without bridges or custodians. Here’s the process, leveraging Bitcoin Layer 1 security and Ethereum smart contracts:

Minting iBTC from BTC

  1. Create Vault on Destination Chain to hold the data for this account's iBTC management.

  2. Lock BTC

    • Action: Merchants deposit BTC into a 2-of-2 multisig vault on Bitcoin Layer 1.

    • Security: The vault requires signatures from both the merchant (KYB-verified) and the Attestor Network, preventing unilateral control.

  3. Attestation & Confirmation

    • Action: The Attestor Network, a decentralized group of node operators, monitors the Bitcoin blockchain to confirm the deposit.

    • Validation: Attestors use FROST (Flexible Round-Optimized Schnorr Threshold Signatures) to co-sign the deposit, requiring a quorum (e.g., 10-of-15 attestors).

    • Efficiency: FROST reduces signature size (~100 bytes vs. 500+ bytes in traditional multisig), lowering transaction costs.

  4. Mint iBTC on the Selected Chain

    • Action: Once confirmed, the Attestor Network triggers the AttestorManager smart contract (Ethereum, Arbitrum, etc.) to mint iBTC on the target chain.

    • Ratio: 1 BTC = 1 iBTC, ensuring a 1:1 peg.

    • Supported Chains: Ethereum, Arbitrum, Optimism, Base, XRPL.

    • Contract: AttestorManager handles minting events, ensuring no over-minting (audited regularly).

Redeeming BTC from iBTC

  1. Burn iBTC

    • Action: Users burn iBTC via their merchant or qualified custodian (QC), triggering a redemption event.

  2. User Requests BTC Redemption

    • Action: User Requests BTC Redemption via the dApp

    • Validation: Attestors confirm the burn, co-sign a PSBT (Partially Signed Bitcoin Transaction), and release BTC from the vault.

    • Speed: Redemption completes in 30-60 minutes, compared to 3-12 hours for traditional wrapped BTC.

Technical Notes

  • PSBT Usage: PSBTs enable secure, self-wrapped minting by allowing partial signing without exposing private keys.

  • Smart Contract: AttestorManager (Ethereum) manages lifecycle events (creation, funding, minting, redemption), with health monitoring to ensure operational integrity.

  • Risk Mitigation: Chainlink PoR verifies BTC reserves before minting, preventing manipulation.