Implementation of the Yala Bridge

The Yala Bridge allows users to deposit Bitcoin and receive yBTC, a tokenized representation of Bitcoin on the Yala platform. This token, yBTC, can then be used as collateral within the Yala ecosystem, allowing users to mint $YU, Yala’s Bitcoin-backed stablecoin, across different blockchain environments, including EVM and non-EVM chains. This process not only facilitates cross-chain liquidity but also broadens the accessibility of Bitcoin in DeFi, making it possible for users to participate in yield-generating activities, lending, and more diverse DeFi strategies.

The bridge is secured by a Decentralized Notary Bridge and MetaSafe Key Management powered by Cubist, ensuring a secure, transparent, and decentralized asset transfer process.

How the Yala Bridge Works

1. BTC Deposit & Key Management

• Users initiate the process by depositing BTC into Yala’s MetaSafe.

• Key management is handled by Cubist, a secure cryptographic solution that ensures asset custody is protected against single points of failure.

2. Decentralized Notary Bridge Validation

• Random Notary Selection: The system selects a random notary to process the transaction.

• Signature Verification: The notary provides a cryptographic signature to confirm asset locking.

• Key Agreement: Secure multi-party computation (MPC) ensures private key management remains trustless.

• Transaction Broadcast: The deposit transaction is finalized on the Bitcoin network, and a message is relayed to the destination chain.

3. Issuance of yBTC on Destination Chain

• Once the Notary Bridge verifies the deposit, an Issuer Smart Contract mints yBTC on the selected destination chain.

• This yBTC acts as a tokenized representation of Bitcoin, allowing users to access DeFi applications.

4. Minting $YU Stablecoin

• Users can use yBTC as collateral to mint $YU within the Yala protocol.

• $YU is then usable across DeFi ecosystems, enabling payments, staking, and liquidity provision.

Yala Bridge

Security & Decentralization of the Yala Bridge

The Yala Bridge prioritizes security, decentralization, and composability through key design elements:

MetaSafe Key Management (Cubist)

• Utilizes secure enclaves and multi-party computation (MPC) to protect private keys.

• Removes single points of failure and enhances institutional-grade custody.

Decentralized Notary Bridge

• Validators operate independently, ensuring decentralized transaction verification.

• Notary selection is randomized, preventing centralization risks.

• Uses multi-signature validation to approve BTC deposits before minting yBTC.

Robust Smart Contract Security

• The Issuer Smart Contract ensures that yBTC is only minted when BTC deposits are properly validated.

• Cross-chain messaging protocols prevent double issuance and unauthorized minting.