Interlay Overview

Interlay is more than just another blockchain project; it is a forward-looking plan to bridge the gap between Bitcoin (the most mature and decentralized cryptocurrency) and the rapidly evolving decentralized finance (DeFi) ecosystem. Interlay is a decentralized network that enables Bitcoin holders to fully unleash the potential of their assets without sacrificing security or trust mechanisms.

Unlike traditional financial systems or centralized cryptocurrency exchanges, Interlay's approach is based on transparency, decentralization, and inclusivity. It leverages advanced cryptographic protocols and innovative technologies to ensure Bitcoin's participation in multi-chain DeFi ecosystems, including Polkadot, Ethereum, and Cosmos.

Interlay is redefining the financial landscape for Bitcoin holders, providing them with opportunities previously limited to more flexible blockchains. Its objective is clear: to secure Bitcoin's dominant position as a financial instrument while seamlessly integrating it into the modern world of decentralized applications (dApps) and financial products.

The vision of Interlay

Interlay's vision is bold yet simple: to make Bitcoin the cornerstone of decentralized finance. The project recognizes Bitcoin's unparalleled position as the most secure and decentralized cryptocurrency, while also acknowledging its limitations in programmability and interoperability. By addressing these challenges, Interlay aims to create a world where Bitcoin holders can use their BTC for lending, trading, and investment without relying on centralized intermediaries or custodians.

This vision is not just about realizing financial transactions; it is about changing the way Bitcoin operates in a wider cryptocurrency ecosystem. Interlay hopes to empower users to ensure that they always control their assets while gaining access to diverse financial services.

Why do we need Interlay?

Despite Bitcoin's dominant position and widespread adoption in the cryptocurrency field, it faces significant challenges in the DeFi space. Its blockchain lacks native support for smart contracts, which are the core of building programmable financial products. This limitation has historically hindered Bitcoin's ability to participate in the thriving DeFi ecosystems on platforms like Ethereum and Polkadot.

Interlay solves these problems with a trustless, decentralized bridge, enabling Bitcoin to interact securely with DeFi platforms. This eliminates reliance on centralized entities that typically act as gatekeepers by holding Bitcoin and introducing single points of failure risk.

In addition, introducing Bitcoin into existing DeFi solutions (such as Wrapped Bitcoin, wBTC) heavily relies on centralized custody, which contradicts the core idea of decentralization. Interlay's trustless approach ensures that users can mint interBTC without sacrificing decentralization or security—an asset pegged 1:1 to Bitcoin.

How does Interlay work?

The core of Interlay is its trustless Bitcoin bridge. This bridge allows users to lock their BTC on the Bitcoin blockchain and mint interBTC (iBTC) on the Interlay platform. iBTC can be seamlessly used in various DeFi ecosystems, enabling users to trade, lend, borrow, and invest without relying on centralized exchanges or intermediaries.

This process is both simple and robust:

1. Lock BitcoinUsers deposit BTC into a decentralized treasury operated by overcollateralized participants.
2. iBTC minting: Locked BTC is used as collateral to mint iBTC, which is a fully fungible token pegged 1:1 to Bitcoin.
3. Using iBTC in DeFiiBTC can be transferred to other blockchains and used in DeFi protocols, just like native assets on these platforms.
4. Redeem BitcoinUsers can redeem iBTC for Bitcoin at any time, ensuring liquidity and trust.

This system is based on cryptographic proof and a powerful economic incentive mechanism, ensuring security, scalability, and user-friendliness.

Key Milestone

Interlay's journey began with the groundbreaking XCLAIM protocol in 2018, which introduced the trustless mechanism for creating 'anchored' Bitcoin assets. Building upon this, Interlay launched its mainnet as a parachain on Polkadot in 2022, leveraging Polkadot's shared security and interoperability features.

Since its establishment, Interlay has achieved several important milestones:

• Mainnet launchSuccessfully deployed interBTC, integrating Bitcoin into DeFi without the need for trust.
• Cross-chain compatibilitySeamlessly integrate with ecosystems such as Polkadot, Ethereum, and Cosmos.
• Community GovernanceThrough its native token INTR, it has implemented a powerful governance model, empowering stakeholders with the ability to shape the future of the network.

Founding Team and Mission

Interlay's foundation is built on the expertise, passion, and forward-thinking of its co-founders Alexei Zamyatin and Dominik Harz. Their extensive academic and professional experience has played a crucial role in the development of Interlay's robust and innovative ecosystem.

Alexei Zamyatin

Alexei was once a doctoral researcher at the Cryptocurrency Lab at Imperial College London, where his research focused primarily on blockchain protocols, decentralized systems, and their security. His rigorous academic background laid the foundation for the development of the XCLAIM protocol, which is the first trustless protocol for cross-chain assets.

Alexei is widely regarded as a thought leader in the cryptocurrency space, having published multiple peer-reviewed papers on decentralized finance and blockchain interoperability. His technical expertise ensures that Interlay's solutions are both cutting-edge and practical.

Dominik Harz

Dominik also graduated from Imperial College London, focusing on decentralized systems and token economics. His work complements Alexei's technical research, ensuring that Interlay's economic and governance models are sustainable and user-centric. He has extensive research achievements in decentralized finance, security models, and cryptographic solutions, bringing a multidisciplinary perspective to the design of Interlay.

Interlay's mission is straightforward but ambitious: to make Bitcoin the cornerstone of decentralized finance (DeFi), while ensuring trust, security, and decentralization. This mission stems from a deep understanding of the advantages and limitations of Bitcoin. Despite being the most secure and widely adopted cryptocurrency, its ecosystem is relatively closed, lacking programmability and interoperability.

This limitation has long isolated Bitcoin from the rapidly growing DeFi field, while DeFi flourishes on more flexible blockchains like Ethereum and Polkadot. Interlay's mission is to bridge this gap and bring Bitcoin into the future of DeFi.

Trustless
All of Interlay's solutions are designed to eliminate reliance on centralized intermediaries. For example, its trustless Bitcoin bridge uses cryptographic proofs to ensure the secure minting and redemption of interBTC (iBTC) without users having to trust any single entity.

Decentralization
Interlay operates as a parachain on Polkadot, leveraging Polkadot's shared security and interoperability. This decentralized architecture ensures that the network is not vulnerable to single point failures.

Inclusivity
By integrating Bitcoin with a multi-chain ecosystem, Interlay opens the door for millions of Bitcoin holders to participate in DeFi. This inclusiveness also extends to developers, who can leverage Interlay's SDK and API to build innovative financial products.

Interlay is not only a tool for Bitcoin holders, but also an important participant in the entire blockchain ecosystem. By enabling interoperability between Bitcoin and other chains, Interlay is driving collaboration and innovation in the DeFi space.

Its work is in line with a broader goal: to create a decentralized financial system that allows everyone, regardless of their geographical location or technical expertise, to easily access and participate.

Historical development

The Birth of XCLAIM (2018)

The concept of Interlay was initially derived from the XCLAIM protocol, which is the world's first trustless cross-chain mechanism for creating 'anchored' assets. XCLAIM proposes a revolutionary approach to tokenize Bitcoin (BTC) and introduce it into smart contract-enabled blockchains such as Ethereum. Unlike centralized solutions like wBTC, XCLAIM allows users to lock Bitcoin in a decentralized manner and mint 1:1 tokenized assets without relying on custodial institutions.

This protocol lays the foundation for Interlay's Bitcoin bridge and its flagship product interBTC (iBTC). The groundbreaking concept of XCLAIM was documented in an academic paper and peer-reviewed, gaining recognition for its innovation in cross-chain asset transfer. However, this theoretical breakthrough needs to be realized in practice - a challenge that Alexei and Dominik are determined to face.

From academic research to practical applications

In 2019, Interlay started to translate academic research into practical applications. During this period, the team received support from well-known institutions and the blockchain ecosystem.

Interlay has received multiple grants from the Web3 Foundation (the organization behind Polkadot) to build a decentralized Bitcoin bridge. Choosing to develop on Substrate (the development framework used by Polkadot) reflects Interlay's commitment to decentralization and interoperability.

In 2020, the team built the first operational prototype of a Bitcoin bridge based on XCLAIM on Ethereum. During this period, rigorous testing of the bridge security mechanism was also conducted, including its reliance on the overcollateralization pool and cryptographic proof.

Release of Kintsugi (Kanaria Network)

Named after the Japanese art of repairing broken pottery with gold, Kintsugi symbolizes resilience and innovation. Running on Kusama, a network designed for high-risk experiments, Kintsugi has a similar architecture and design to Interlay but allows for faster iteration and testing. Kintsugi has launched kBTC, a bitcoin-pegged asset similar to iBTC, providing users with a preview of Interlay's future capabilities.

Kintsugi serves as a testing ground for new features, including cross-chain transactions and governance mechanisms. Through this platform, the team can identify and address potential issues to ensure a smoother deployment process before the mainnet goes live.

The launch of the Interlay mainnet

After years of research, development, and testing, Interlay officially launched as a Polkadot parachain in 2022. Polkadot's shared security model and interoperability features make it an ideal platform for Interlay's decentralized Bitcoin bridge. As a parachain of Polkadot, Interlay is able to leverage Polkadot's ecosystem to connect Bitcoin to a wide range of DeFi platforms.

Interlay v2 and future development

Building on the initial success, Interlay has launched Interlay v2, an enhanced version of the network aimed at expanding its functionality and user base.

Key Improvement

1. Native DeFi toolsGate.io has introduced lending, borrowing, and trading protocols specifically designed for Bitcoin users, further enriching its functional ecosystem.

2. Enhanced scalabilityImproved network architecture to handle higher transaction volume, enhancing overall performance and user experience.

3. Collateral reuseThe vault can now use tokenized assets as collateral, thus improving capital efficiency and fully unleashing asset potential.

4. Cross-chain support expansionIntegrate with Ethereum, Cosmos, and other ecosystems to further enhance interoperability and network value.