Sushi, a prominent DeFi platform, has teamed up with ZetaChain, a platform known for its interoperability capabilities, to investigate the potential for direct Bitcoin swaps across a diverse network of 30 blockchains.
Under this collaboration, Sushi’s decentralized exchange (DEX) will be integrated with ZetaChain. This integration is set to enable Bitcoin trading across various blockchains without the necessity of wrapping the cryptocurrency. The process is touted as being native, decentralized, and permissionless. It will include the incorporation of Sushi’s versions 2 and 3 of automated market makers, as well as its cross-chain swap functionality, SushiXSwap.
Ankur Nandwani, a principal contributor at ZetaChain, conveyed to the press that this alliance could effectively introduce Bitcoin’s vast user base to the DeFi sector in a straightforward manner. He addressed doubts about the possibility of conducting Bitcoin transactions across chains without wrapping, pointing to existing examples like THORChain, which already facilitates native Bitcoin trades with other chain assets. Nandwani also referred to Bitcoin side chains as an alternative method.
He further elaborated that ZetaChain’s approach enables the development of Bitcoin-compatible decentralized applications (DApps) capable of executing contracts and transactions directly with Bitcoin. This method, he acknowledged, does hinge on trust in the decentralization of the network managing these cross-chain transactions.
ZetaChain has already successfully trialed this technology in its test environment and is looking to validate its effectiveness with the upcoming launch of its mainnet. This launch will be in collaboration with SushiSwap and other DeFi platforms.
Jared Grey, the lead figure at Sushi, commended this integration as a significant advancement for the DeFi sector, emphasizing the revolutionary impact of direct Bitcoin swapping. The collaboration between Sushi and ZetaChain will unfold in two phases. The first phase involves introducing a DEX on ZetaChain’s testnet to support basic asset exchanges and liquidity management, along with beta testing and incentives for app testing.
With the launch of ZetaChain’s mainnet, Sushi is set to become one of its primary launch partners, with the expectation of fully functional Bitcoin interoperability capabilities. Nandwani provided an in-depth explanation of the technical process that enables direct BTC cross-chain swaps.
A cross-chain swap contract is to be implemented on ZetaChain’s Ethereum Virtual Machine, which is omnichain, meaning it can interact with any connected blockchain, including Bitcoin. To initiate a cross-chain swap, users send a Bitcoin transaction with a specific memo to a TSS address. This memo includes the omnichain contract address on ZetaChain and the desired value for the contract, such as Ether or USD Coin on Ethereum, as well as the recipient’s address on the target chain.
The TSS address, controlled by ZetaChain’s signer validators, secures the transferred BTC. These validators then observe and vote on the transfer within ZetaChain. Once a consensus is reached, an inbound cross-chain transaction (CCTX) from Bitcoin to ZetaChain is established.
Upon processing a CCTX, the ZetaChain omnichain contract is activated, converting the transferred BTC into ZRC-20 BTC. This ZRC-20 BTC is then exchanged for another token’s ZRC-20 variant, like ZRC-20 ETH, which is subsequently transferred to the intended chain. During this transfer, the ZRC-20 ETH is destroyed, and an outbound CCTX is created from ZetaChain to Ethereum. Finally, native ETH is transferred from the TSS address on Ethereum to the intended recipient.
This example provided by Nandwani illustrates the decentralized process facilitated by ZetaChain’s network validators, enabling native BTC to be swapped for native ETH across various connected chains.
