Original source: Jasper Vault
From May 9 to 10, Bitcoin Magazine held the first Global Bitcoin Conference in Hong Kong. As a staunch successor to peer-to-peer decentralized finance, Jasper Vault launched a peer-to-peer option trading product for native Bitcoin Layer 1 assets during the conference - Hash Timelock Contract Options (HTLC Options). Timelock options use hash timelock contracts to set the payment of option strike price as a condition of the timelock contract without changing the native Bitcoin peer-to-peer payment characteristics, and combine the Taproot signature algorithm to implement a peer-to-peer option trading protocol on the Bitcoin native chain.
The Bitcoin DeFi route proposed by Jasper Vault is significantly different from the currently popular Bitcoin Layer 2 Wrapped Tokens or cross-chain bridges. Jasper Vault's time-locked option protocol allows option buyers to use the stablecoin USDT to pay option fees on the EVM chain, while the option underlying is still Bitcoin itself. Liquidation still uses Bitcoin Layer 1 and does not need to leave the UTXO account of the Bitcoin network. Therefore, there is no need for cross-chain bridges or conversion to any wrapped tokens (Wrapped Tokens) during the transaction process, perfectly retaining the security of Bitcoin's peer-to-peer decentralization.
When using the TimeLock Option Protocol, users need to hold two wallets at the same time: a Bitcoin wallet (such as Ledger) and an EVM wallet (such as MetaMask). Peer-to-peer interoperability consists of two parts. The delivery of the option underlying Bitcoin is carried out in the UTXO account of Bitcoin Layer 1, while the payment of option fees and exercise prices is completed on the Ethereum (Layer 1 and Layer 2) chain using stablecoins (such as USDT) through the corresponding abstract accounts (ERC-4337, Account Abstraction) of both parties. The TimeLock Option Protocol is also compatible with the use of Program Derived Addresses (PDAs) on Solana to complete option exercise.
Jasper Vault provides a way to introduce Bitcoin, the most important asset in cryptocurrency, to Ethereum Layer 1, Layer 2, and Solana chains without changing the peer-to-peer native ecology of Bitcoin Layer 1. In this way, while maintaining the basic peer-to-peer ecology, full interoperability between cross-chain accounts is achieved.
The core technology of Bitcoin Time Lock Option is based on hash time lock and Taproot multi-signature combined with the programmability of smart contract public chain, providing decentralized financial option trading of native Bitcoin. Its advantages include:
1. Inheriting the Bitcoin peer-to-peer ecosystem: The two parties to the transaction implement the transaction on the infrastructure of the smart contract chain and the Bitcoin script based on the Taproot upgrade in accordance with the prior agreement, without the intervention of a third party to complete the entire transaction process.
2. BTC native asset security: There is no need to transfer BTC assets to accounts controlled by a third party or convert them into Wrapped Tokens. Before option trading, BTC assets are locked in a multi-signature address UTXO account based on Schnorr signatures. After the option is exercised, the assets are transferred to the UTXO account of the trading party through Schnorr signatures according to the option trading logic, ensuring that BTC assets are most securely protected by the Bitcoin Layer 1 network throughout the option trading process.
3. Cross-chain interoperability: Although Bitcoin assets are stored in UTXO accounts, option fees and exercise price payments occur on other smart chains. The time-locked option protocol can be adapted to EVM Layer 1 and Layer 2 public chains based on abstract accounts, and is compatible with Solana's PDA address to achieve cross-chain interaction and interoperability between accounts.
Jasper Vault's options protocol for Bitcoin native assets uses the Bitcoin network's own time lock technology and Taproot signatures to introduce decentralized options business directly to the Bitcoin Layer 1 native chain, while maintaining peer-to-peer cash payments and options protocols. Bitcoin holders can obtain additional option fee income by selling bullish Bitcoin options (Covered Call) in their UTXO accounts, or hedge their Bitcoin holdings by purchasing put options (Protective Put). For those staunch Bitcoin believers who want to earn idle Bitcoin income but do not trust other public chains, Jasper Vault provides an almost perfect solution. This solution allows Bitcoin holders to participate in options trading on the Bitcoin native chain while maintaining asset security and decentralization.
Jasper Vault's time-locked option protocol is now available in beta. In the future, the time-locked option protocol will be continuously improved based on user and community feedback, and will be further connected to other public chains. At the same time, more application scenarios beyond options will be developed, and it is committed to building a peer-to-peer decentralized financial system that maintains the original ecology of Bitcoin. This effort is all about returning to the original intention, that is, to realize a peer-to-peer electronic cash payment and option protocol, to provide Bitcoin holders with more financial tools and participation opportunities, while maintaining its original ecological characteristics and decentralized concept.
This article is from a contribution and does not represent the views of BlockBeats
