Acurast played a major role in the development of the recently launched tzBTC 2.0. One key innovation is leveraging the Acurast execution environment for the automation of this security-sensitive process.
What is tzBTC
tzBTC is a wrapped Bitcoin token that utilizes the advantages of the Tezos protocol, such as its stability, its fast transactions, and low transaction fees. It is maintained on the Tezos blockchain through a smart contract, ensuring parity with the underlying asset via Keyholders and an independent auditor.
Launched in April 2020, so far, more than 1,000 BTC have already been wrapped, with a current market capitalization of over $62.9 million (by the 16th of April 2024).
In the past, acquiring tzBTC involved a complex process. tzBTC entrusted bitcoin custody to a group of trusted institutions, known as Keyholders, responsible for managing tzBTC’s supply and maintaining its 1:1 peg. Gatekeepers, on the other hand, authorized by Keyholders, ensure compliance by conducting KYC and AML checks for minting or burning tzBTC, achieving a transparent and compliant wrapped bitcoin on Tezos.
While accessible for on-chain transactions on Tezos, the minting and burning route via Gatekeepers and Keyholders was limited to a few large organizations, and for an unattractive price.
These limitations in accessibility and cost-effectiveness prompted the need for evolution.
TzBTC 2.0
The new and improved version of tzBTC addressed these issues. One key innovation of tzBTC 2.0 is leveraging the Acurast execution environment to automate this security-sensitive process, making it more accessible and user-friendly.
These new improvements shall not only remain in the Tezos ecosystem. With its new setup and especially with the help of Acurast, tzBTC's next steps are to enable the minting of tzBTC on other blockchains. For example, users will be able to choose their favorite blockchain when minting or burning tzBTC. To get a full overview of how tzBTC 2.0 works, head over to tzBTC's website.
Acurast Involvement in tzBTC
In tzBTC v1.0, Gatekeepers were relied upon to mint and burn tzBTC. This process has now been replaced by automated processes.
The tzBTC bridge is built on Acurast's Decentralized Serverless Cloud platform technology. To bridge from BTC to tzBTC, a user sends BTC to a Bitcoin Redeem-Script governed by the Keyholders and their Acurast Processors.
These Acurast Processors observe and verify this transaction on multiple Bitcoin nodes. Once confirmed, the Acurast Processors act as signers authorized to sign a minting transaction on the tzBTC contract on Tezos. A similar process is in place when sending tzBTC to BTC: The Acurast Processors verify the burn on the tzBTC side and then redeem the BTC on the Bitcoin side.
There is more
Acurast’s role in the tzBTC ecosystem is not limited to its automated processes. Its use of the Acurast trusted execution environment to automate sensitive security processes is a testament to its commitment to ensuring the system’s integrity and security.
The Acurast execution environment leverages secure elements inside mobile devices to ensure that not even the operator with physical access to the device (in this case, the Keyholder) can interfere with or manipulate this automation logic. It effectively enables the automation of minting and burning, ensuring that tzBTC will be instantly available to Gatekeepers.
This automation reduces the work for Keyholders and, going forward, enables them to offer their services for a flat yearly fee.
What does tzBTC's workflow look like?
tzBTC is composed of three different processes. Initiating involves potential end-users, whereas Minting and Burning are done by Keyholders and Gatekeepers.
Initiating
This process is seamless: The Gatekeeper cross-checks the user’s identity by carrying out the required KYC and AML checks. This makes the user eligible to send BTC to the Gatekeepers and get the corresponding tzBTC tokens in return (after being minted by Keyholders).
Minting
Creating a new tzBTC is called Minting. When a Gatekeeper requests a new tzBTC, Keyholders use a multi-signature setup to mint the tzBTC. The minted tzBTC is then sent to a Gatekeeper, who allocates it to a User.
Burning
Burning removes tzBTC from circulation. A Gatekeeper can request to burn tzBTC by sending them to a specific address managed by a multi-signature wallet controlled by Keyholders. Once burned, the corresponding BTC is transferred to a Gatekeeper and then allocated back to a User.
About Acurast
Acurast is the serverless, decentralized cloud where anyone can become part of the cloud with their mobile phone, whether new, used, or even with a smashed screen, by providing compute power and earning rewards. It gives developers complete permissionless access to compute that is trustless, affordable, and confidential for deploying their applications.
For more information, visit Acurast, follow on X for updates, and join the community on Discord or Telegram.
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