What sets Interlay apart from its competitors?

Here we can highlight:

Why are we doing interBTC?

I’d like to use a comparison first. We like to insure things. We like to be one the safe side, generally. We insure cars, we insure our phones, our houses. We even have insurance for the USD that we have in the bank other than from the government or from banks themselves.

Then, with Bitcoin for some reason we don’t have that if we use it in DeFI. If you want to use Bitcoin in DeFi today, you have to go through a centralized provider or a centralized exchange. And let’s take the two-three biggest wrapped Bitcoin providers. You have wBTC, you have renBTC, you have hBTC. All of them are centralized today. In the end you have to trust these intermediaries. I am not saying that they will steal your Bitcoins, I really doubt that. These are great teams that have achieved a lot in the ecosystem. But it goes against the vision. You always have the risk that there is a hack, that there are regulator events or that you have to prove where the BTC came from. And you didn’t even, well, you weren’t prepared for that.

The risk here is you have I think today it’s $15 billion worth of BTC on Ethereum that is backed by trust. And this is $15 billion USD worth of BTC that can turn to zero from one day to another if there is a hack. This is not just isolated to the centralized Bitcoin wrap version itself. If you look at MakerDAO, MakerDAO uses wBTC as collateral and it’s pretty big on that. If wBTC fails, I don’t know what will happen to MakerDAO and to other projects that use it as collateral.

This is essentially the unique value proposition that you have in interBTC. You don’t need to trust any single person. You have a decentralized network of Vaults, where anyone can run Vaults and the only thing you need to do is that you provide collateral. You insure people who use your service against human behavior. It’s a model following the collateralization scheme of DeFi. This is exactly how interBTC works.

• If you steal as a Vault, you lose your collateral and this collateral will be used to reimburse the users.
• As a user, you always know: You get your Bitcoin back, or, in the worst case scenario, you will be reimbursed an insurance and you can use that to buy Bitcoin, and you can always lead the system and you always know you will not face financial damage due to someone stealing your BTC.

This is essentially a very clear and unique value proposition for anyone who plans to use Bitcoin in Defi, and not just for a few trades, but long term. Use it as collateral, for example, lock it up in DeFI protocols to earn yield. But in particular, for DeFi protocols, like stablecoin lending platforms and so on, which rely on interBTC as a liquidity collateral asset. Because for them there is no quick exit, they depend on the security of the protocol and the Bitcoin that they use.

If it is centralized, well I mean, you know what they say: The chain is only as strong as the weakest link. So, if the weakest link is your centralized Bitcoin bridge, then your DeFi is at risk. This is essentially what interBTC solves.