Interlay's technical architecture
This section focuses on the technical pillars of Interlay, covering its consensus mechanism, computing framework, and infrastructure layer. We will explore how Polkadot's Nominated Proof-of-Stake (NPoS) mechanism and Substrate framework support the operation of Interlay, ensuring network scalability, security, and efficiency. In addition, we will delve into decentralized treasury, staking mechanisms, and cross-chain interoperability to fully understand the technological system that supports the seamless operation of Interlay.
Interlay's consensus mechanism
In blockchain, the consensus mechanism is usually seen as a tool for maintaining consistency in distributed networks. However, for Interlay, the consensus mechanism serves a dual purpose: ensuring security and achieving cross-chain interoperability. As a parachain of Polkadot, Interlay adopts Polkadot's nominated proof-of-stake (NPoS) system. This is not only a technical choice, but also a strategic decision.
The security provided by NPoS
Validators and nominators jointly ensure the security of the network. Validators are responsible for generating new blocks and validating transactions, while nominators delegate their stakes to trusted validators to ensure the fairness and efficiency of the system. Unlike traditional Proof of Stake (PoS) models, NPoS emphasizes decentralization by distributing validation responsibilities to a diverse group of participants, enhancing the network's distributed nature.
Polkadot's shared security
Polkadot's relay chain provides a shared security model, which means that Interlay does not need a separate set of validators, reducing operating costs while maintaining strong protection against potential attacks. By leveraging this shared security, Interlay can focus on its core mission: making Bitcoin a key player in DeFi.
Interlay's Computing Mechanism
In blockchain, computation is often narrowly understood as the execution of smart contracts. However, for Interlay, the essence of computation lies in achieving secure, efficient, and decentralized operations that align with its core values.
Interlay is developed based on Substrate, which is a development framework that supports Polkadot and provides high customization and optimization capabilities. The modular design of Substrate allows Interlay to adjust its blockchain according to the specific requirements of decentralizing Bitcoin management. For example, smart contracts automate complex processes such as the minting and redemption of iBTC, ensuring accuracy and transparency. At the same time, the runtime upgrade function allows the network to evolve without the need for disruptive hard forks, thus maintaining adaptability to new challenges.
Computing tasks, such as managing collateral or processing iBTC transactions, are optimized to ensure speed and cost effectiveness, providing users with a smooth experience even under high network loads. Through Substrate, Interlay achieves a balance between computing flexibility and operational efficiency, providing users with dual guarantees of innovation and reliability.
Infrastructure layer
Interlay's infrastructure layer is the backbone of its trustless Bitcoin bridge, interBTC (iBTC), and seamless interaction between Bitcoin and multiple DeFi ecosystems on different blockchains. This layer combines cutting-edge technology, economic models, and a distributed participant network to ensure the security, scalability, and interoperability of the system.
Interlay's infrastructure layer is built on top of a trustless Bitcoin bridge. This mechanism allows Bitcoin (BTC) to be locked on its native blockchain and represented as iBTC on interoperable networks such as Polkadot, Ethereum, and Cosmos. Bitcoin is locked in decentralized vaults operated by independent participants. Vault operators must over-collateralize their holdings with other cryptocurrencies to ensure system security even in the event of market fluctuations. Once Bitcoin is locked, users can mint iBTC in a 1:1 ratio as a tokenized representation of their BTC.
The treasury is permissionless, and anyone who meets the collateral requirements can become an operator. Operators earn fees by providing services, thereby incentivizing participation and enhancing network reliability. The treasury system eliminates the risk of single points of failure and significantly reduces the associated risks of relying on centralized custodians.
Transactions are secured through cryptographic proof, ensuring transparency and auditability. Users can verify the status of their locked bitcoins at any time, establishing trust in the system. This trustless mechanism embodies the core principles of Bitcoin decentralization and security, setting Interlay apart from centralized solutions like Wrapped Bitcoin (wBTC).
Oracle Network
Interlay's infrastructure relies on a decentralized Oracle network that provides accurate and real-time data sources. These Oracles play a crucial role in ensuring network integrity by providing reliable external information to smart contracts, ensuring the robustness of the system. By integrating high-quality Oracles, Interlay can effectively prevent tampering and errors, further enhancing the reliability of the infrastructure.
Mortgage and Liquidation Mechanism
Interlay's infrastructure layer includes sophisticated collateral and liquidation mechanisms, which are crucial to maintaining network stability and security. Vault operators need to lock up collateral worth more than the Bitcoin value they manage. Overcollateralization serves as a buffer against market fluctuations, ensuring that users can redeem their iBTC even in the event of vault operator default. These mechanisms build a self-regulating system that prioritizes user safety while incentivizing vault operators to maintain responsible behavior.
Multi-Chain Connector
Interlay's multi-chain connector enables interoperability between Bitcoin and other blockchain ecosystems, making iBTC a truly universal asset. iBTC can seamlessly transfer across multiple blockchains, including Polkadot, Ethereum, and Cosmos. Regardless of the underlying blockchain technology, developers can integrate iBTC into their DeFi applications.
Scalability and performance
Scalability is a key consideration for any blockchain infrastructure, and Interlay effectively addresses this challenge through integration with Polkadot. As a parachain of Polkadot, Interlay benefits from Polkadot's shared security framework, providing the network with strong protection capabilities. This model allows Interlay to focus on scalability and functionality without sacrificing security.
Developer Tools and API
The infrastructure layer also includes a set of developer tools and APIs for seamless integration with the Interlay ecosystem. By providing developers with user-friendly tools, Interlay stimulates innovation and expands the potential application scenarios of its platform.
DeFi Layer
Interlay's DeFi layer acts as a bridge between Bitcoin and decentralized finance. Building on top of the infrastructure layer that provides security and interoperability, the DeFi layer enables users to participate in various financial activities in tokenized forms (interBTC, iBTC). This layer supports users to borrow, trade, and stake assets in a multi-chain ecosystem, making Bitcoin a first-class asset in the DeFi world.
Lending feature of iBTC
One of the core functions of the Interlay DeFi layer is to use iBTC for lending. This function brings Bitcoin's liquidity into the DeFi market, allowing users to earn passive income by lending iBTC, or to obtain liquidity through collateral without selling their assets.
Integration of decentralized exchange (DEX)
Interlay's DeFi layer supports integration with decentralized exchanges (DEX), allowing users to trade iBTC and other digital assets in a trustless and permissionless environment. DEX integration is a key feature to enhance liquidity and create active markets for iBTC.
Staking and Yield Farming
The DeFi layer provides staking and yield farming functions, and users earn rewards by actively participating in the network. This creates additional value and incentive mechanisms for iBTC holders.
Collateral Management in DeFi
Interlay's DeFi layer leverages its advanced collateral management system to enhance iBTC functionality while maintaining network stability. The collateral mechanism plays a critical role in lending and other financial activities within the ecosystem.
One-click Financial Strategy
To enhance user experience, Interlay's DeFi layer has designed a convenient one-click financial strategy, simplifying complex operations. This feature is particularly suitable for DeFi beginners and helps reduce entry barriers.
Cross-chain DeFi applications
With Interlay's multi-chain architecture, the DeFi layer supports cross-chain DeFi applications, enabling iBTC to be seamlessly used across different ecosystems. This significantly enhances the practicality of iBTC and expands its potential use cases.
Application layer
Interlay's application layer is the user-facing side of its ecosystem, focusing on providing tools and functionality for users and developers to seamlessly interact with Interlay's infrastructure and DeFi capabilities. By offering intuitive interfaces, developer-friendly resources, and robust support for cross-chain operations, the application layer bridges the gap between complex blockchain technology and real-world usability.
Interlay's technical architecture
This section focuses on the technical pillars of Interlay, covering its consensus mechanism, computing framework, and infrastructure layer. We will explore how Polkadot's Nominated Proof-of-Stake (NPoS) mechanism and Substrate framework support the operation of Interlay, ensuring network scalability, security, and efficiency. In addition, we will delve into decentralized treasury, staking mechanisms, and cross-chain interoperability to fully understand the technological system that supports the seamless operation of Interlay.
Interlay's consensus mechanism
In blockchain, the consensus mechanism is usually seen as a tool for maintaining consistency in distributed networks. However, for Interlay, the consensus mechanism serves a dual purpose: ensuring security and achieving cross-chain interoperability. As a parachain of Polkadot, Interlay adopts Polkadot's nominated proof-of-stake (NPoS) system. This is not only a technical choice, but also a strategic decision.
The security provided by NPoS
Validators and nominators jointly ensure the security of the network. Validators are responsible for generating new blocks and validating transactions, while nominators delegate their stakes to trusted validators to ensure the fairness and efficiency of the system. Unlike traditional Proof of Stake (PoS) models, NPoS emphasizes decentralization by distributing validation responsibilities to a diverse group of participants, enhancing the network's distributed nature.
Polkadot's shared security
Polkadot's relay chain provides a shared security model, which means that Interlay does not need a separate set of validators, reducing operating costs while maintaining strong protection against potential attacks. By leveraging this shared security, Interlay can focus on its core mission: making Bitcoin a key player in DeFi.
Interlay's Computing Mechanism
In blockchain, computation is often narrowly understood as the execution of smart contracts. However, for Interlay, the essence of computation lies in achieving secure, efficient, and decentralized operations that align with its core values.
Interlay is developed based on Substrate, which is a development framework that supports Polkadot and provides high customization and optimization capabilities. The modular design of Substrate allows Interlay to adjust its blockchain according to the specific requirements of decentralizing Bitcoin management. For example, smart contracts automate complex processes such as the minting and redemption of iBTC, ensuring accuracy and transparency. At the same time, the runtime upgrade function allows the network to evolve without the need for disruptive hard forks, thus maintaining adaptability to new challenges.
Computing tasks, such as managing collateral or processing iBTC transactions, are optimized to ensure speed and cost effectiveness, providing users with a smooth experience even under high network loads. Through Substrate, Interlay achieves a balance between computing flexibility and operational efficiency, providing users with dual guarantees of innovation and reliability.
Infrastructure layer
Interlay's infrastructure layer is the backbone of its trustless Bitcoin bridge, interBTC (iBTC), and seamless interaction between Bitcoin and multiple DeFi ecosystems on different blockchains. This layer combines cutting-edge technology, economic models, and a distributed participant network to ensure the security, scalability, and interoperability of the system.
Interlay's infrastructure layer is built on top of a trustless Bitcoin bridge. This mechanism allows Bitcoin (BTC) to be locked on its native blockchain and represented as iBTC on interoperable networks such as Polkadot, Ethereum, and Cosmos. Bitcoin is locked in decentralized vaults operated by independent participants. Vault operators must over-collateralize their holdings with other cryptocurrencies to ensure system security even in the event of market fluctuations. Once Bitcoin is locked, users can mint iBTC in a 1:1 ratio as a tokenized representation of their BTC.
The treasury is permissionless, and anyone who meets the collateral requirements can become an operator. Operators earn fees by providing services, thereby incentivizing participation and enhancing network reliability. The treasury system eliminates the risk of single points of failure and significantly reduces the associated risks of relying on centralized custodians.
Transactions are secured through cryptographic proof, ensuring transparency and auditability. Users can verify the status of their locked bitcoins at any time, establishing trust in the system. This trustless mechanism embodies the core principles of Bitcoin decentralization and security, setting Interlay apart from centralized solutions like Wrapped Bitcoin (wBTC).
Oracle Network
Interlay's infrastructure relies on a decentralized Oracle network that provides accurate and real-time data sources. These Oracles play a crucial role in ensuring network integrity by providing reliable external information to smart contracts, ensuring the robustness of the system. By integrating high-quality Oracles, Interlay can effectively prevent tampering and errors, further enhancing the reliability of the infrastructure.
Mortgage and Liquidation Mechanism
Interlay's infrastructure layer includes sophisticated collateral and liquidation mechanisms, which are crucial to maintaining network stability and security. Vault operators need to lock up collateral worth more than the Bitcoin value they manage. Overcollateralization serves as a buffer against market fluctuations, ensuring that users can redeem their iBTC even in the event of vault operator default. These mechanisms build a self-regulating system that prioritizes user safety while incentivizing vault operators to maintain responsible behavior.
Multi-Chain Connector
Interlay's multi-chain connector enables interoperability between Bitcoin and other blockchain ecosystems, making iBTC a truly universal asset. iBTC can seamlessly transfer across multiple blockchains, including Polkadot, Ethereum, and Cosmos. Regardless of the underlying blockchain technology, developers can integrate iBTC into their DeFi applications.
Scalability and performance
Scalability is a key consideration for any blockchain infrastructure, and Interlay effectively addresses this challenge through integration with Polkadot. As a parachain of Polkadot, Interlay benefits from Polkadot's shared security framework, providing the network with strong protection capabilities. This model allows Interlay to focus on scalability and functionality without sacrificing security.
Developer Tools and API
The infrastructure layer also includes a set of developer tools and APIs for seamless integration with the Interlay ecosystem. By providing developers with user-friendly tools, Interlay stimulates innovation and expands the potential application scenarios of its platform.
DeFi Layer
Interlay's DeFi layer acts as a bridge between Bitcoin and decentralized finance. Building on top of the infrastructure layer that provides security and interoperability, the DeFi layer enables users to participate in various financial activities in tokenized forms (interBTC, iBTC). This layer supports users to borrow, trade, and stake assets in a multi-chain ecosystem, making Bitcoin a first-class asset in the DeFi world.
Lending feature of iBTC
One of the core functions of the Interlay DeFi layer is to use iBTC for lending. This function brings Bitcoin's liquidity into the DeFi market, allowing users to earn passive income by lending iBTC, or to obtain liquidity through collateral without selling their assets.
Integration of decentralized exchange (DEX)
Interlay's DeFi layer supports integration with decentralized exchanges (DEX), allowing users to trade iBTC and other digital assets in a trustless and permissionless environment. DEX integration is a key feature to enhance liquidity and create active markets for iBTC.
Staking and Yield Farming
The DeFi layer provides staking and yield farming functions, and users earn rewards by actively participating in the network. This creates additional value and incentive mechanisms for iBTC holders.
Collateral Management in DeFi
Interlay's DeFi layer leverages its advanced collateral management system to enhance iBTC functionality while maintaining network stability. The collateral mechanism plays a critical role in lending and other financial activities within the ecosystem.
One-click Financial Strategy
To enhance user experience, Interlay's DeFi layer has designed a convenient one-click financial strategy, simplifying complex operations. This feature is particularly suitable for DeFi beginners and helps reduce entry barriers.
Cross-chain DeFi applications
With Interlay's multi-chain architecture, the DeFi layer supports cross-chain DeFi applications, enabling iBTC to be seamlessly used across different ecosystems. This significantly enhances the practicality of iBTC and expands its potential use cases.
Application layer
Interlay's application layer is the user-facing side of its ecosystem, focusing on providing tools and functionality for users and developers to seamlessly interact with Interlay's infrastructure and DeFi capabilities. By offering intuitive interfaces, developer-friendly resources, and robust support for cross-chain operations, the application layer bridges the gap between complex blockchain technology and real-world usability.