What is Interlay?
Interlay v1, currently operational, provides Bitcoin holders with a groundbreaking opportunity to participate in DeFi through a unique and secure bridge architecture.
This innovative system allows users to lock their BTC on the Bitcoin blockchain, generating iBTC, a 1:1 representation of Bitcoin on Interlay that's compatible with various networks. iBTC functions as a vaulted asset, safeguarded by a decentralized network of vault operators utilizing a MakerDAO-like over-collateralization approach and cryptographic cross-chain verification.
In the event of a vault operator's failure and loss of BTC, affected iBTC holders can seek reimbursement by claiming the operator's collateral, mitigating financial risks. Additionally, iBTC enjoys seamless interoperability across networks facilitated by Polkadot's trustless cross-chain mechanism (XCM), enabling access to platforms such as Acala, Moonbeam, Astar, and Parallel within the ecosystem. Notably, Interlay's bridge isn't confined to Bitcoin and can be extended to support other networks, accommodating diverse security models and expanding its reach.
What benefits does Interlay bring to Bitcoin?
- Interoperability. The modular architecture also works cross-chain: Utilizing XCM, IBC, or Snowfork, components of the protocol stack can be optimized. For example, if there are AMMs with deeper liquidity or less slippage, then the one-click strategies might opt to replace the Interlay AMM for specific assets with asynchronous cross-chain AMM calls.
- Scalability: Sub-modules that require high throughput can be outsourced to additional Substrate chains, either operating as equivalent units to Interlay (as is the case for the Kintsugi canary network) or as hierarchically subordinate chains (the Interlay chain would assume a coordination role, similar to the Polkadot Relay Chain.
- Composability without Smart Contracts: Being a Substrate chain, Interlay supports combining multiple blockchain interactions into a single transaction without writing custom smart contract code. Any user can craft complex financial products within the synchronous environment of the Interlay chain, utilizing the Bitcoin bridge, lending protocol, the decentralized exchange, as well as advanced features such as flash swaps.
- Forkless upgrades: The Interlay runtime is a deterministic WASM code. As consensus nodes execute the WASM code that is stored in the network, the runtime can be upgraded independently of upgrading the consensus nodes. By accepting a new WASM runtime through governance, the consensus nodes simply execute the updated runtime without having to opt-in to any changes.
- Bring Your Fees: One of the most cited pains of using new blockchain networks is acquiring the “gas” token to pay for fees, even before the first interaction. Interlay v2 follows a “bring-your-own-fees” strategy: while the underlying fees are paid in the native INTR token, users can pay in a set of whitelisted external assets, which are swapped into INTR on the fly using the decentralized exchange.
What are Interlay's main use cases?
- DeFi
- Swapping
- Lending and Borrowing
- Trading
- Staking
- Pools
