Our core contributions to Bitcoin L2s

The Zest Protocol team made some important contributions to Bitcoin infrastructure to redefine Bitcoin lending.

4

minute read

December 12, 2023

Tycho Onnasch

Before building Zest Protocol, we spent two years building on Bitcoin at Trust Machines. Now, we’re bringing a lot of the things we worked on to life with Zest Protocol.

Building on Bitcoin at Trust Machines

In late 2021, we joined Trust Machines. In hindsight, this was a big asymmetric bet that paid off. While the market was pumping the latest EVM-compatible L1 blockchain or aping into the most elaborate NFT ponzi schemes, we came across a small group of people who had spent their entire professional lives on building on Bitcoin. Muneeb had just launched a Stacks (a Bitcoin L2) and teamed up with his Princeton mentor JP Singh to do something very ambitious: found what should become the leading Bitcoin company. 

Our job description was something along the lines of ‘figuring out Bitcoin DeFi’. Having spent most of the past year generating yield on our BTC on various blockchains, this felt like the right challenge to take on. Within a few months, we had some initial designs for Bitcoin DeFi protocols on testnet using the limited tooling available at the time (DLCs, trustless atomic swaps, everything was on the menu). However one thing became clear quickly, we needed a better Bitcoin L2 for Bitcoin DeFi to really take off.

Shifting focus to the Stacks Nakamoto upgrade

When it comes to Bitcoin programming layers, the Stacks L2 was and is the most advanced option. It only made sense that we would focus on extending its capabilities. Together with the Stacks core entities we made the first designs for a programmable Bitcoin on the Stacks L2, now called sBTC. Shortly thereafter these designs came together as part of a larger proposal for a hard fork to the Stacks L2: the Nakamoto upgrade.

After the FTX collapse happened, it became clear that infrastructure would be the name of the game for the next year. We decided to fully focus on sBTC. What is now the Zest Protocol technical team made key contributions to sBTC. Specifically OP_DROP peg-ins, which allow users to send native BTC to Stacks L2 smart contracts with a single Bitcoin transaction. This is a core primitive for our BTC Earn product. Zest Protocol cofounder Tycho also made important contributions to Stacks core business development, such as helping ecosystem entities bring some important integrations across the line with staking providers and custodians.

Bringing Zest Protocol to mainnet

Now that the Nakamoto upgrade to the Stacks L2 is only months away, the time has come to fully focus on Zest Protocol. We’ve left our roles at Trust Machines and will be launching Zest Protocol’s BTC Earn product concurrently with the Nakamoto upgrade which is scheduled for the time of the Bitcoin Halving. 

Before then, we’ll go to mainnet with a first borrow product on Stacks to attract initial TVL and grease the wheels of our smart contracts with real capital. Keep an eye out for more updates on X or on this mailing list, Q1 2024 is going to be exciting.

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Written by
Tycho Onnasch
December 12, 2023
@TychoOnnasch

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