Zest Protocol Launches Bitcoin Collateral Vaults Allowing Loans Without Wrapping BTC
Zest Protocol has launched a mainnet demo of its Bitcoin Collateral Vaults, enabling users to borrow against their Bitcoin on EVM chains without wrapping the asset. The vaults are self-custodial and governed by Bitcoin's own rules, with each holding individual user deposits in Taproot outputs that restrict BTC movement paths. The system allows borrowers to use a collateral record tied to the vault to draw USDC from an Ethereum-based lending market while their BTC remains on-chain. Borrowers can adjust positions based on price movements and face partial liquidations if needed, with recovery mechanisms designed for chain failures or invalid settlements handled by independent guardians before transitioning to BitVM verification. This innovation aims to reduce reliance on custodians like those managing WBTC, which has faced issues in the past due to centralized control risks. Zest's approach enhances security and autonomy while keeping Bitcoin within its native blockchain.
Topics: Bitcoin DeFi lending EVM chains Taproot Zest Protocol