FAQ
Tech
1. Designed as a monolithic blockchain, how can you achieve modularity on Bitcoin?
Natively with its proof-of-work (POW) mechanism, Bitcoin does not have any Data Availability (DA) layer, relying on the distributed ledger that is maintained across all full nodes. Each node has a complete copy of the blockchain, ensuring no single point of control or failure can compromise the data's integrity or availability. Yala protocol introduces a novel approach with a modular layer in which the indexer plays a central role. Besides organizing and indexing data to enable efficient queries, the indexer acts as a validator between the Black and White modules that facilitate DeFi solutions for Bitcoin and inscription assets. Moreover, programmable modules would be embedded in the indexer to allow functionalities such as smart contracts and EVM compatibility, ensuring modularity.
2. How do the Black and White modules work?
Modules are classified into two types based on their functionality and the consensus level required for their operation:
Black Modules: support deposits but do not allow withdrawals.
White Modules: support deposits and withdrawals, contingent on universal acceptance by the network's indexers. Their dual capability makes them more complex and adaptable. They transition to 'white' status upon reaching consensus among all indexers, denoting full functionality, including withdrawals, ensuring consistency and stability throughout the network.
3. With the inscriptions, most of the core components are off-chain. How do you ensure the trustlessness and decentralized aspect?
The indexer and the oracle are off-chain at their core and current state. The Yala protocol would take the following steps to achieve full trustlessness and decentralization:
Maintain and play a central role in a network of federated indexer validators
Build and propose a standardized norm for the indexer, and open-source the code
Educate community builders to adhere to this norm and contribute to the decentralization of the indexer
4. Can you be slashed?
Currently, the Yala protocol does not operate any nodes, so slashing is not within the scope. However, once the indexer is fully on-chain, we will establish rules for validators to ensure alignment and maintain a high level of service.
5. Are you a competitor of Bitcoin-based Layer 2 (L2)?
No, L2 solutions focus on scaling by handling transactions off-chain, aiming to improve transaction speed and reduce costs. We offer a modular approach, focusing on decentralized consensus and the DA layer. It will allow developers to create customized solutions without worrying about security and capacity. We would partner with layer 2 solutions, making us complementary rather than direct competitors.
Product
1. What’s the advantage of the Yala solution compared to conventional bridging with wBTC?
Wrapped tokens are centrally bridged assets whereas Yala commits to offering a decentralized approach
Yala USD is a UTXO type of asset that sits at the same level of consensus as that of Bitcoin, inheriting its security
Yala Finance supports any UTXO-type of assets, including BRC20, BRC420, ARC, and RUNE.
The modular infrastructure provided by the Yala protocol allows assets to interact across different ecosystems without relying on bridges, offering a completely decentralized and trustless experience.
2. How much time would it take to either collateralize assets or stake on different DeFi protocols across ecosystems?
Staking and minting are UTXO transactions so the time is the BTC block time, so 10 minutes. However, generating stablecoins and various calculations depend on the target VM chain's block time, so it's quite fast. For example, if a user completes a transaction to deposit BTC and receive Yala stablecoin YU balance, they must wait for one BTC block time plus one ETH block time. This YU balance is communicated to the whitelist module by the indexer, then to Yala, indicating its available balance data, rather than being withdrawn to the blockchain. If he wants to use these YU for operations in other modules, he doesn't need to conduct another UTXO transaction on the BTC blockchain. Instead, the YU balance data can be directly mapped from the YU whitelist module to other modules, so it's very fast.
3. How are assets secured once the users staked on Yala?
UTXO-type of assets are natively stored in the Black module, whereas Bitcoin are stored using the MPC solution provided by our partner Fireblocks.
4. Could anyone potentially hack the White module?
No, the White module would only mint assets after receiving the approval from the indexer. Moreover, because of the nature of the UTXO type asset, every new transaction is recorded on a new ledger, so there is no multisig or private key involved.
5. Could you elaborate on how staking happens in other DeFi protocols across different ecosystems?
The indexer is the core of this cross-ecosystem process.
A Black module is created at the VM level of the destination ecosystem.
After the user has staked their collateral and selected the DeFi product. After the White module has confirmed the staking, the indexer and oracle would transfer the information to the black module at the VM level.
Once approved, the equal amount of stablecoin is minted on the destination chain.
Finally, YU on the destination chain format is swapped to supported stablecoin (USDT, USDC,...) before being staked on the DeFi protocol. All the steps happen in the back-end, providing a seamless experience to the user.
6. How is the YU-USDT/USDC pool maintained?
Yala would provide initial liquidity, but every pool on any ecosystem would be maintained organically over time as Liquidity Providers (LP) are incentivized to provide liquidity to earn fees from transactions. Theoretically, Yala would only need to maintain a single pool on the Uniswap Ethereum and publish the destination address of the YU on different chains so that LPs can create the pools.
7. What is the overcollateralization ratio and how are interest rates calculated?
Yala Foundation would decide the over-collateralization ratio, and the market participants would set the interest rates as the latter evolve depending on the offer and demand.
8. What are the sources of income for the protocol?
Our revenue stream comprises 3 sources:
Infrastructure tools: Fees from partner builders using the Indexer and Oracle service.
Application protocol: Fees from partner protocols' staking rewards.
Stablecoin: Stability fees paid in $Yala token, akin to an interest rate for generating YU, and liquidation fees for the collateral liquidation process when its value falls below a specific threshold.
9. What is your GTM strategy?
Our go-to-market strategy aims to position Yala as a key infrastructure for Bitcoin DeFi and ecosystems:
Pre-launch Stage: Build recognition for the Yala Protocol, aiming to partner with 10-15 key projects and grow our community to 50,000 members.
Launch Stage: Achieve widespread adoption of our architecture, lending protocol, and stablecoin. Success will be measured by the ecosystem's Total Value Locked (TVL) and establishing around 10 distribution channels with exchanges, wallets, and payment platforms for user accessibility.
Post-launch, Develop a decentralized governance framework, aiming for a foundation governed by and belonging to the DAO. This strategy leverages the network effect, with partners, community, and developers as vital stakeholders. The token will catalyze network growth, enabling decentralized collaboration. Additionally, decentralized governance ensures fair revenue allocation among participants.
Partnerships
1. What are the current partners?
Yala has partnered with the following protocols:
Babylon for restaking: As a delegate, Yala lets users stake BTC directly on Babylon via a dedicated module on Yala, and information is synchronized via API. As a result, Yala users can not only stake BTC but also pledge inscription assets to borrow additional BTC on Yala to stake on Babylon. This strategic initiative enhances yield generation for Yala's users and has transformed a prominent player in the Bitcoin DeFi ecosystem into one of our stakeholders.
Polyhedra for information transmission: Polyhedra with its zkBridge represents a trustless cross-chain infrastructure designed to facilitate interoperability between layer-1 and layer-2 networks through the use of advanced zero-knowledge proof technology. Therefore, the Polyhedra offers a secure, minimally trust-dependent solution for seamless interoperability, enabling efficient asset transfers, message communication, and data sharing between various Web2 and Web3 systems.
Avail: Avail’s pioneering Web3 infrastructure layer is designed to empower modular execution layers to scale and interoperate in a trust-minimized environment. Avail’s DA layer, Nexus interoperability layer, and Fusion Security network layer - collectively known as the Avail Trinity - form a robust foundation for the next generation of scalable apps. By leveraging Avail’s BTC Roll-Up solution, Yala is developing a Roll-Up module on the DA layer, encompassing an Indexer and SDK. This integration ensures high throughput for Yala’s protocol without sacrificing security for decentralization, thanks to the advanced Roll-Up technology provided by Avail.
Layer2 (L2) Botanix for applications: Botanix is an EVM equivalent decentralized platform built on Bitcoin. Yala will develop a Black module on Botanix to endow the Yala protocol with smart contract capabilities. On the other hand, Yala's indexer could help Botanix in parsing the data and integrating its capabilities into the inscription ecosystem.
L2 Stacks for stablecoin YU usage: Stacks allows smart contracts and dApps to use Bitcoin as an asset and settle transactions on Bitcoin. It introduces Clarity, a decidable smart contract language, to the Bitcoin ecosystem, enabling developers to know a program's behavior before execution, thus reducing bugs and vulnerabilities. The partnership focuses on integrating YU with various Stacks DeFi protocols, aiming to enhance stability and liquidity in the Stacks DeFi ecosystem through a decentralized and secure method and boosting YU adoption and utility.
Inscription project Nubit for efficient DeFi infrastructure: Nubit is a scalable, cost-efficient Data Availability (DA) layer designed to achieve instant finality, thereby considerably enhancing transaction confirmation times. Partnership scenarios include enabling Yala’s oracle to enhance data security and transparency to jointly support other L2 rollup solutions. Moreover, the Yala lending protocol could benefit from Nubit by achieving fast finality.
Inscription projects OPI (to be confirmed): OPI (Open Indexer) is an open-source indexing client designed for Bitcoin meta-protocols. It is built to be the best-in-slot solution for indexing tasks. Yala proposes decentralizing the inscription indexer system by establishing a network of distributed indexers using federated voting, aimed at mitigating centralization risks and incorporating rigorous data validation and consensus protocols.
Unisat, Xverse, OKX wallets for integration (to be confirmed): Web3 wallets have made managing inscription tokens easier by bypassing traditional exchange listings and enabling direct access within their platforms. Yala will collaborate with these wallets to ensure our tokens are readily integrated, improving user accessibility and functionality from the start.
Security
1. How is Bitcoin custody secured?
Bitcoin custody is secured through Fireblocks, a comprehensive platform designed for the secure management of digital assets, catering to a wide range of needs within the digital asset ecosystem. Fireblocks integrates a defense-in-depth architecture, combining MPC-CMP and hardware security to eliminate single points of compromise, thereby creating a secure environment for storing, issuing, and transferring digital assets. The infrastructure is designed to be reliable and resilient, capable of handling high transaction throughput and millions of wallets. Fireblocks' Direct Custody model ensures that users retain full control of their private keys, with multiple disaster recovery options to guarantee business continuity. Finally, it integrates with leading compliance solutions for real-time transaction monitoring, ensuring compliance with AML, KYT, and Travel Rule regulations directly from the platform.
2. How would you address the offchain and centralization concerns around BRC20?
To mitigate centralization in BRC-20 token management, Yala proposes a decentralized indexing strategy in its whitepaper, including:
Establishing a distributed network of indexers.
Adopting federated voting to reduce centralization risks.
Implementing rigorous data verification and consensus protocols to ensure the accuracy and integrity of token balance information. Furthermore, Yala partners with Nubit to utilize decentralized algorithms (DA) for indexer validation, promoting transparency and integrity in indexer operations.
3. How about the issue around the oracle?
Yala Finance emphasizes oracle security, vital for its lending protocol reliant on real-time asset price data. This data comes from Oracle nodes, processed by the Oracle and OSM Modules under the Yala Foundation. Given smart contracts in Web3 depend heavily on oracles for external data, compromised oracle data poses significant security threats. Therefore, ensuring high-quality data and a secure oracle infrastructure is crucial to prevent exploits and maintain decentralized application integrity. Initially, the Yala Foundation, comprising Yala holders, coordinates rate setting, price stabilization, lending script maintenance, and market surveillance for emergencies.
4. Would you undergo any audit?
Yala will have its smart contracts rigorously inspected by high-reputation security auditors, focusing on medium and high-risk issues as per auditor recommendations. Automated testing tools will be utilized early in development to detect common vulnerabilities, and audits will be performed bi-annually to accommodate codebase updates and expansions.
5. Audits are rather static, so how would you prevent any future threats?
To preempt future security threats, a 24/7 Security Operations Center (SOC) will monitor network activity, use vulnerability scanners, and gather threat intelligence for early detection of potential security issues. SOC analysts will examine anomalies to identify incidents, guided by an incident response plan for threat containment, damage mitigation, disclosure coordination, and fix integration. This plan will be regularly tested with simulated attacks to enhance preparedness for complex threats.
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