Wrapless: The trustless lending protocol on top of Bitcoin
Oleksandr Kurbatov, Kyrylo Baibula, Yaroslava Chopa, Sergey Kozlov, Oleh Komendant, Illia Dovhopolyi, Dmitrii Kurbatov, Zakhar Naumets, Yuliia Aritkulova, Pavel Kravchenko, Volodymyr Dubinin, Lasha Antadze, Yaroslav Panasenko, Mykhailo Velykodnyi
TL;DR
Wrapless introduces a trustless Bitcoin-based lending protocol that allows collateralization without wrapping, enabling cross-chain loans via smart contracts with economic incentives to ensure honest participation.
Contribution
It presents a novel protocol for trustless Bitcoin collateralization and cross-chain lending without relying on trusted wrapping mechanisms.
Findings
Enables Bitcoin collateralization without trusted wrapping
Supports cross-chain loans on Turing-complete smart contract platforms
Designs economic incentives to prevent manipulation
Abstract
This paper presents Wrapless -- a lending protocol that enables the collateralization of bitcoins without requiring a trusted wrapping mechanism. The protocol facilitates a "loan channel" on the Bitcoin blockchain, allowing bitcoins to be locked as collateral for loans issued on any blockchain that supports Turing-complete smart contracts. The protocol is designed in a way that makes it economically irrational for each involved party to manipulate the loan rules. There is still a significant research area to bring the protocol closer to traditional AMM financial instruments.
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Taxonomy
TopicsBlockchain Technology Applications and Security · FinTech, Crowdfunding, Digital Finance · Cryptography and Data Security