Thread by @makehillout666

1) To my #DotSama family - I'm asking for your help to push Interlay's parachain, @kintsugi_btc, to a contribution amount that will ensure they secure this slot in the current parachain auction period. Why should you care? If you believe in Bitcoin or DeFi, read on to find out...

2) Kintsugi (金継ぎ) - Japanese art of repairing broken pottery by mending the areas of breakage using lacquer dusted or mixed with powdered gold/silver/platinum. As a philosophy, it treats breakage & repair as part of the history of an object, rather than something to disguise.

3) Kintsugi BTC - Unfracture trustless money. Earn BTC and other assets as rewards on your Bitcoin without it ever leaving your custody.

4) Problem: Currently, there's no way for BTC holders to transfer BTC cross-chain without relinquishing control of the assets to a third party. One of the most significant aspects of Bitcoin's value proposition is the trustlessness with which one may transact on the network.

5) The Bitcoin network was created to be one which no singular entity or group of entities can collude to seize control of to manipulate or orchestrate in their favor.

6) Solution: Kintsugi BTC allows users to create overcollateralized vaults that hold BTC, locked on the Bitcoin blockchain, redeemable to whoever holds the fungible token representing the wrapped Bitcoin in the Kintsugi vault (kBTC).

7) Vaults are overcollateralized with other assets so that, in the case of theft, the victim who lost their tokens will be reimbursed for 110% of the loss by the protocol which may be redeemed for BTC via any other vault across the network.

8) So, how does it work?

Kintsugi BTC uses a protocol called XCLAIM that allows for trustless transfer of BTC cross-chain. Not just on Polkadot & Kusama either, the first presentation of XCLAIM was actually for trustless wrapping of Bitcoin on Ethereum!

9) This means Kintsugi will be interoperable throughout many chains, not limited strictly to the others connected with Kintsugi via Kusama's L0 meta-protocol.

10) By the use of XCLAIM, Kintsugi vaults receive BTC from the Bitcoin blockchain via the Kintsugi bridge. This BTC remains locked as collateral for minting kBTC until you choose to redeem kBTC for the underlying Bitcoin asset.

11) Users who wish to start their own vault must provide collateral and upload their Bitcoin public key to the bridge. The amount of BTC that can be deposited is determined by the amount of collateral provided to ensure profitable reimbursement of the vault's Bitcoin holdings.

12) Your funds are insured, without the need for trust, by the overcollateralization of each and every Kintsugi BTC vault.

13) How are vault operators incentivized?

As service providers, vaults are part of a fee pool and earn BTC fees when users mint/redeem. Vaults also receive the native Kintsugi token $KINT as block rewards. Native $KINT rewards are 30% total supply over time for vault operators.

14) Due to the ability of Kintsugi to use various forms of collateral for the vault overcollateralization, assets such as Liquid $DOT (LDOT) or Liquid $KSM (LKSM) will be eligible for use as the collateral necessary for users to start & operate their own vaults.

15) Why is this great?

A. Vaults already earn interest on their collateral. LDOT or LKSM being used as collateral means vaults will be earning that much extra interest on their locked assets.

16)

B. Since LDOT and LKSM are constantly earning you interest and increasing in value themselves over time, you will essentially be auto compounding your liquid token yields into the interest-earning, multi-collateral, decentralized vault.

17) In conclusion:

Interlay/Kintsugi has made a groundbreaking contribution to both Bitcoin and its flexibility as a financial instrument, as well as the world of Decentralized Finance as a whole.

18) Anyone who buys or has bought BTC to hold for long periods of time (for taxes, retirement, future generations, etc.) can actually safely earn interest on that BTC. In the meantime, it remains solely in their custody, as Bitcoin ultimately should.

19) All of this is ready to start being deployed and used as soon as Kintsugi is up-and-running on Kusama as an official parachain.

20) Please help support @kintsugi_btc's acquisition of a parachain slot by contributing $KSM to their crowdloan via one of the following links (not referral links):

21)

Official crowdloan module on polkadot{.js} - polkadot.js.org/apps/?rpc=wss%…

Official Interlay web portal for Kintsugi crowdloan contributions - kintsugi.interlay.io

Zenlink Slotvault (with optional Bifrost SALP participation) - slotvault.zenlink.pro/#/auctions

@threadreaderapp unroll

Amendment:

You don’t upload a public key. You run a vault node which runs a Kintsugi substrate node & bitcoind instance simultaneously.

Users deposit to those BTC addresses & collect kBTC on the substrate side. Substrate nodes interact with bitcoind to assert funds are safu.