How ReserveBTC Works
ReserveBTC enables Bitcoin holders to participate in DeFi without giving up custody of their Bitcoin. Here's a comprehensive breakdown of how the protocol works.
Protocol Architecture
Bitcoin Layer
Users maintain full custody of their Bitcoin in their own wallets
Oracle System
Verifies Bitcoin balances and synchronizes with smart contracts
MegaETH Layer
Smart contracts mint synthetic tokens representing Bitcoin holdings
Step-by-Step Process
User Registration & Address Verification
Users connect their EVM wallet (MetaMask, WalletConnect, etc.) to the ReserveBTC interface and provide their Bitcoin address for verification.
Supported Bitcoin Address Types:
- • Legacy (P2PKH): Starting with '1'
- • SegWit (P2SH): Starting with '3'
- • Native SegWit (P2WPKH): Starting with 'bc1'
- • Taproot (P2TR): Starting with 'bc1p'
BIP-322 Signature Creation
The user creates a BIP-322 signature to prove ownership of their Bitcoin address without revealing private keys or transferring Bitcoin.
What is BIP-322?
Bitcoin Improvement Proposal 322 provides a standard way to create signatures that prove ownership of Bitcoin addresses for any address type.
Security Benefits
No private key exposure, no Bitcoin transfer required, cryptographically verifiable proof of ownership.
Oracle Monitoring System
The Oracle server continuously monitors Bitcoin addresses via BlockCypher API and automatically detects balance changes to trigger token synchronization.
Oracle Server Features (oracle-server.js):
✓ BlockCypher API integration
✓ 5-minute monitoring intervals
✓ CLI management interface
✓ Automated sync() calls
✓ Delta detection & validation
✓ Fee management system
Automatic Token Management
The Oracle automatically calls the sync() function on smart contracts to mint/burn tokens based on detected Bitcoin balance changes, without requiring user interaction.
rBTC-SYNTH (Soulbound)
- • Non-transferable tokens
- • Perfect 1:1 backing
- • Automatic balance sync
- • Lower gas costs
wrBTC (Transferable)
- • Standard ERC-20 token
- • Fully transferable
- • DeFi compatible
- • Trading enabled
Continuous Synchronization
The Oracle system continuously monitors Bitcoin balances and automatically updates token supplies to maintain perfect backing ratios.
Synchronization Process:
• Oracle checks Bitcoin balances every 5 minutes
• Balance changes trigger automatic token adjustments
• Mint new tokens when Bitcoin balance increases
• Burn tokens when Bitcoin balance decreases
• All changes are transparent and verifiable on-chain
Security Guarantees
No Custody Risk
Your Bitcoin never leaves your wallet
Cryptographic Proof
BIP-322 signatures provide mathematical certainty
Real-time Backing
Tokens always reflect actual Bitcoin holdings
Smart Contract Audits
Independently verified and tested code
Decentralized Oracle
No single point of failure in verification
Open Source
Fully transparent and verifiable protocol