Introducing sBTC
Side Protocol has launched sBTC, a Bitcoin-pegged token designed to enhance Bitcoin’s usability and interoperability within DeFi. Pegged 1:1 to BTC on the Bitcoin mainnet, sBTC offers low transaction fees, near-instant finality, and compatibility with Bitcoin-native wallet formats.
By operating on Side Chain, a Bitcoin-compatible Layer 1 blockchain, sBTC bridges the gap between Bitcoin’s security and the flexibility needed for DeFi and blockchain applications. This marks a significant milestone in Bitcoin’s evolution, providing users with faster, more cost-effective transactions while maintaining seamless integration with the broader blockchain ecosystem.
What Makes sBTC Unique?
1:1 Bitcoin Peg
sBTC is pegged 1:1 to BTC held securely on the Bitcoin mainnet. This ensures that every sBTC token is backed by an equivalent amount of Bitcoin, maintaining value parity and user trust.
Fast and Low-Cost Transactions
Transactions on the Side Chain achieve finality in seconds, significantly reducing the wait times associated with the Bitcoin mainnet. Fees are also much lower, making sBTC a practical solution for frequent transactions.
Simplified Gas Fees
Unlike other blockchain systems, users can pay transaction fees directly in sBTC, eliminating the need to hold SIDE tokens. This streamlined fee model simplifies adoption for Bitcoin users.
Bitcoin Wallet Compatibility
sBTC supports Bitcoin-native address formats, including Taproot and Native SegWit. This compatibility allows users to interact with sBTC using familiar Bitcoin wallets, ensuring a seamless transition to Side Chain’s ecosystem.
Cross-Chain Interoperability
sBTC can bridge to other blockchains using the IBC Protocol, enabling its integration with various networks and decentralized applications. This interoperability expands its use cases beyond the Side Chain.
How Does sBTC Work?
sBTC operates through a secure framework involving a Bitcoin Light Client and a Threshold Signature Scheme (TSS). Together, these systems ensure seamless peg-in and peg-out processes for transferring assets between the Bitcoin network and the Side Chain.
Peg-In Process
Users transfer BTC to vault addresses managed by the TSS network.
Transactions are verified on the Bitcoin mainnet after reaching a required confirmation threshold.
Relayers submit verified transactions to the Side Chain, where sBTC is minted in a 1:1 ratio with the deposited BTC.
Peg-Out Process
Users initiate a withdrawal by burning sBTC on the Side Chain.
The TSS network co-signs the withdrawal transaction.
Relayers broadcast the signed transaction to the Bitcoin mainnet, releasing the equivalent BTC to the user.
These processes ensure a secure and transparent 1:1 peg between Bitcoin and sBTC, enabling users to transition between networks with minimal friction.
Supporting Infrastructure
Bitcoin Light Client
The Bitcoin Light Client validates Bitcoin transactions by processing block headers submitted by relayers. This allows the Side Chain to track Bitcoin network activity without requiring full nodes.
Threshold Signature Scheme
The TSS network, comprising 21 validators, manages vaults and co-signs transactions. The system requires at least 15 validators to operate securely, ensuring decentralized control and reliability.
Relayers and Fee Providers
Relayers manage transaction synchronization between Bitcoin and the Side Chain, while Bitcoin fee providers ensure up-to-date fee rates for peg-out requests. These components work together to maintain efficiency and accuracy.
Why sBTC Matters
sBTC addresses Bitcoin’s limitations in speed, cost, and cross-chain functionality. By leveraging the Side Chain, it unlocks new use cases in decentralized finance and blockchain interoperability.
For developers, sBTC provides a scalable and flexible platform to build applications that integrate Bitcoin’s value and security. For users, it offers an accessible gateway to participate in DeFi without compromising on compatibility with Bitcoin’s ecosystem.
Current Status
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