Crypto Defi Swaps Testing on ZetaChain with Bitcoin DeFi
Sushi taps into ZetaChain to begin testing native Bitcoin DeFi swaps

Crypto Partnership to Enable Native Bitcoin Swaps

The DeFi platform Sushi has partnered with the interoperability platform ZetaChain to explore the possibility of native Bitcoin (BTC) swaps for its users across 30 different blockchain networks.

Sushi’s implementation of its decentralized exchange (DEX) on ZetaChain is set to enable trading of BTC without wrapping across many blockchains in a native, decentralized, and permissionless way.

The collaboration will include Sushi’s v2 and v3 automated market makers and Sushi’s cross-chain swap, SushiXSwap.

Ankur Nandwani, a core contributor to ZetaChain, told Cointelegraph that the partnership could bring Bitcoin’s vast user base to the decentralized finance (DeFi) sector in a native manner. He also rebutted arguments claiming that bridging BTC without wrapping the assets on another chain is not possible.

Examples of Web 3.0

THORChain is one of the early examples of Web 3.0, which is trading Bitcoin with other chain assets. Other approaches, like Bitcoin side chains, also offer a flavor of Web 3.0.

ZetaChain’s approach allows anyone to build Bitcoin-interoperable decentralized applications (DApps) for settling contracts and transactions natively. The crypto technology has been proven at a testnet level and will be further proven with its mainnet launch through partnerships with SushiSwap and other DeFi protocols.

Sushi head chef Jared Grey praised the integration as a major advancement for DeFi, describing the ability to swap Bitcoin natively as a “game-changer” for the crypto finance industry.

Sushi and ZetaChain Integration

Sushi and ZetaChain are entering into a partnership to enable crypto-finance and Web 3.0 technology. The integration will take place in two phases. The first phase will see Sushi introducing a DEX on ZetaChain’s testnet to support asset swaps and liquidity provision, as well as beta testing and application incentives.

When ZetaChain launches its mainnet, Sushi will become one of its launch partners. This will be followed by full Bitcoin interoperability functionality. Nandwani outlined the technical details of native BTC cross-chain swaps, which involve deploying a cross-chain swap contract on ZetaChain’s Ethereum Virtual Machine.

The contract is omnichain, meaning that while it is deployed on ZetaChain, it can be called from any connected chain, including Bitcoin. To call a cross-chain swap contract, users must send a native token transfer transaction on Bitcoin with a special memo to a TSS address. This memo contains the omnichain contract address on ZetaChain, as well as the value passed to the contract, such as Ether (ETH) or USD Coin (USDC) on Ethereum, and the recipient address on the destination chain.

Crypto Defi and Web 3.0

The TSS address is owned by ZetaChain signer validators and is used for crypto defi. BTC transferred to the TSS address is locked, and validators observe this event and cast a vote on ZetaChain. If enough votes are cast, an inbound cross-chain transaction (CCTX) is created from Bitcoin to ZetaChain. This is an example of Web 3.0, also called the decentralized internet.

The CCTX triggers a ZetaChain omnichain contract, and the amount of BTC is minted as ZRC-20 BTC. During the cross-chain swap contract execution, ZRC-20 BTC is swapped for another crypto token, such as ZRC-20 ETH. ZRC-20 ETH is then withdrawn to the destination chain, where it is burned and an outbound CCTX is created from ZetaChain to Ethereum. Validators vote on this CCTX on ZetaChain, and when processed, native ETH is transferred from the TSS address on Ethereum to the intended recipient.

This example provided by Nandwani outlines how native BTC can be swapped for native ETH in a decentralized manner, facilitated by ZetaChain’s network validators across connected chains.

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