Security

iBTC prioritizes the security of user assets through a multi-layered approach, incorporating robust mechanisms and industry best practices.

Bitcoin Network Security: The foundation of iBTC's security lies in the inherent strength and decentralization of the Bitcoin network itself. By leveraging the immense hashrate and proven track record of Bitcoin, iBTC inherits its underlying security and resilience.

Chainlink Proof of Reserve (PoR): Chainlink PoR enhances transparency and trust by providing real-time audits of the underlying Bitcoin reserves. It utilizes a decentralized network of oracles to periodically check the Bitcoin addresses associated with iBTC, ensuring that the amount of iBTC in circulation is fully backed by an equivalent amount of Bitcoin held in reserve. This provides users with confidence that their iBTC tokens represent actual Bitcoin ownership.

Chainlink Cross-Chain Interoperability Protocol (CCIP): CCIP further strengthens security by securely connecting blockchains and ensuring tamper-proof communication between them. This decentralized messaging system mitigates the risk of cross-chain vulnerabilities, providing an extra layer of protection during cross-chain operations.

Segregated Custody: Unlike traditional custodial services that pool assets, iBTC employs segregated custody, where each merchant's Bitcoin is locked in a unique multi-sig DLC. This approach ensures that assets are never commingled and that each merchant retains full control over their funds. In case of any issues, only the user can unlock their Bitcoin, preventing systemic risks associated with pooled custody.

Cryptographic Proofs: iBTC leverages advanced cryptographic proofs to ensure the integrity and authenticity of all transactions. These proofs verify that Bitcoin has been correctly locked in a DLC and that the conditions for unlocking it have been met. This cryptographic assurance prevents tampering and guarantees that funds can only be moved according to the contract terms.

Theft-Proof Mechanism: The protocol's design includes inherent theft-proof mechanisms to protect against unauthorized access. Even if malicious actors gain access to the system, they cannot redirect or steal the locked Bitcoin. The DLCs are designed to pay only the original depositor, making the assets theft-proof. This is achieved through pre-signed liquidation addresses that ensure Bitcoin can only be returned to its rightful owner.

Additional Security Measures: In addition to these core security features, iBTC implements regular security audits, continuous monitoring, and rigorous testing to identify and mitigate potential vulnerabilities. The platform also employs a decentralized network of DLC Attestors who validate blockchain events and ensure the accuracy and security of cross-chain communications.

These combined security features make iBTC one of the safest ways to use Bitcoin in DeFi while maintaining control and minimizing risk.