Proposal to onboard dlcBTC to Aave v3 on the Ethereum pool.
dlcBTC is a decentralized wrapped Bitcoin on Ethereum, enabling Bitcoin holders to participate in DeFi protocols while retaining full ownership of their assets. It leverages Discreet Log Contracts (DLCs) for secure cross-chain transactions, ensuring trustless and decentralized asset management. dlcBTC uses a federated set of merchants who lock BTC with themselves to mint dlcBTC, similar to USDC's model.
Unlike other bridges, dlcBTC merchants "self-wrap" Bitcoin, meaning funds are never sent to an external address, reducing the risk of theft or loss. dlcBTC has a Chainlink proof of reserve feed: https://data.chain.link/feeds/arbitrum/mainnet/dlcbtc-por.
Benefits of listing that token:
Listing dlcBTC will enable Bitcoin holders to use their assets as collateral within Aave, increasing liquidity and user engagement on the platform. It will attract a broader user base from the Bitcoin community and enhance the diversity of collateral options within Aave. Additionally, it supports DeFi platforms such as Nektar and Swaap, which can generate staking yield using dlcBTC.
Market Impact:
Including dlcBTC will positively impact Aave's liquidity and user adoption, as Bitcoin is the largest digital asset by market cap and worldwide brand recognition. dlcBTC's secure and decentralized nature will contribute to the platform's growth and stability, providing additional security for users and increasing the overall market size of Aave. wBTC has been a huge success, but its use of a single custodian is a known source of counterparty risk. By decentralizing the merchant set, dlcBTC severely reduces the effect of a counterparty failure.
Chain to be deployed/listed:
Arbitrum, Ethereum
Proof of Liquidity (POL) and Deposit Commitments: