YU: BTC-backed stablecoin earning yield across chains

The rise of DeFi has opened up new opportunities for financial innovation, but Bitcoin's architectural constraints have hindered its ability to participate fully in this rapidly evolving ecosystem. Yala's solution is leveraging Bitcoin's unique properties while introducing DeFi capabilities, focusing on offering a BTC-backed stablecoin that can natively earn yield on multiple chains.

2.1 The Ordinals protocol: An opportunity to Bitcoin DeFi

Inscriptions, a breakthrough innovation enabled by the Ordinals protocol, allows for issuing and managing digital assets directly on the Bitcoin blockchain. By assigning unique identifiers to individual satoshis (the smallest units of Bitcoin), inscriptions enable the creation of non-fungible tokens (NFTs) and other digital assets, including Yala's BTC-backed stablecoin, on the Bitcoin network.

Building upon this foundation, Meta Protocols (BRC-20, BRC-100, BRC-420, and so forth) enable the integration of indexers on the Bitcoin network, paving the way for a truly decentralized DeFi ecosystem on Bitcoin.

2. 2 Yala's BTC-backed stablecoin: earning yield across chains

Yala's modular approach to Bitcoin allows for introducing programmable smart contracts and DeFi applications, including a BTC-backed stablecoin that can natively earn yield on multiple chains. Please read Yala’s whitepaper for detailed technical design. By leveraging the robust security framework of EVMs like Ethereum or No EVM like Solana, Yala's stablecoin offering will incorporate lending/borrowing protocol, liquidity pools, and governance contracts, all backed by formal verification to ensure mathematical correctness.

With Yala's solution, holders of the BTC-backed stablecoin can seamlessly participate in DeFi opportunities across various blockchain networks, earning yield on their Bitcoin holdings without sacrificing the Bitcoin network's security and decentralization principles.

2. 3 Robust security and decentralization

Yala's solution prioritizes security and decentralization, aligning with Bitcoin's founding principles. The indexer network enabled by federated voting diminishes centralization risks in centralized BRC-20 indexing, while strict data verification and consensus protocols ensure the reliability and integrity of maintained token balance information.

Collaboration with Nubit provides additional data availability validation for honest indexer behavior, and the BRC-20 black/white module separation enforces robust security principles for deposit/withdrawal transactions.

2. 4 Execution layer and oracle network

At the execution layer, Bitcoin asset management leverages Bitcoin vaults using threshold signatures for robust security without single points of failure. Yala's decentralized Oracle network also provides tamper-resistant real-time price data, which is critical for managing liquidations and maintaining the stablecoin peg.

By introducing a BTC-backed stablecoin that can natively earn yield on multiple chains, Yala is unlocking Bitcoin's potential in the rapidly evolving DeFi ecosystem. This approach combines Bitcoin's robust security and decentralization with the innovation and flexibility of DeFi, creating a powerful and user-centric blockchain ecosystem for a diverse digital economy.