Interlay v2: Bitcoin Finance, Unbanked

Dear Interlay Community,

We propose a new vision document for Interlay v2, following up on the original technical paper from 2018 and the Interlay v1 specification.

As a community, we have been working hard to bridge the gap between Bitcoin and DeFi, shipping the first-ever fully decentralized and economically trustless BTC bridge. iBTC can already be used in DeFi protocols across numerous parachains and over $10 million has been processed in bridge volume across Kintsugi and Interlay. The bridge has undergone 5 audits and withstood a trial of fire during the recent market crash - fulfilling the original vision of Interlay v1.

Interlay v2 proposes to take the next step toward the mass adoption of Bitcoin: making access to decentralized BTC finance as easy as using an ATM. This is achieved by introducing native DeFi functionality to the network: a decentralized AMM-based exchange (Uniswap v2 model and Curve Stableswap) paired with a liquidity protocol for BTC borrowing and lending (Compound v2 model). By creating markets catering to Bitcoin holders and building deep liquidity in these protocols, Interlay will enable easy, one-click access to Bitcoin-centered DeFi use cases, ranging from simple passive liquidity provision to tailored long/short leverage positions.

The whitepaper provides a deep dive into the Interlay v2 architecture, covering consensus, (bridge and oracle) infrastructure, DeFi, and application layers. Further, it proposes updates to the fee model as well as the economic model of the native INTR token (short “INTRnomics”). Finally, it offers an outlook on upcoming product and feature improvements, as well as open “moonshot” problems that have the chance to turn into zero-to-one innovations.

We call the community to review this vision document and share thoughts, ideas, and suggestions - and ultimately put the proposed course of action to a vote.

Your voice as a community, as always, defines the next steps for Interlay - and in this case, for the future of Bitcoin DeFi.

Interlay v2: Bitcoin Finance, Unbanked (v0.1)

For those who prefer experimentation over reading: a first, raw alpha of the DeFi Hub is already live on testnet

Interlay is a community that has created a bridge between Bitcoin and DeFi. They have shipped the first-ever fully decentralized and economically trustless BTC bridge called iBTC. Interlay v2 proposes to make access to decentralized BTC finance as easy as using an ATM by introducing native DeFi functionality to the network. They plan to create markets catering to Bitcoin holders and building deep liquidity in these protocols, enabling easy, one-click access to Bitcoin-centered DeFi use cases. They have released a whitepaper that provides a deep dive into the Interlay v2 architecture, covering consensus, infrastructure, DeFi, and application layers. They call the community to review this vision document and share thoughts, ideas, and suggestions. A first, raw alpha of the DeFi Hub is already live on testnet for experimentation.