These Bitcoin Users Want DAI and DeFi

Summa co-founder James Prestwich wants to bridge the great divide: bitcoin vs. ethereum.

Now his firm is teaming up with fellow blockchain startup Keep to launch the Cross-Chain Working Group, which aims to create a protocol for using bitcoin on ethereum-based systems.

"The goal is to provide a platform for developers, other than those employed by a base chain, who work across chains," Prestwich told CoinDesk.

In short, the bitcoin is deposited with a smart contract that requires multiple signatures to unlock funds.

In the meantime, the depositor is essentially given a crypto equivalent of ethereum-compatible tokens that represent the bitcoin, called tBTC. As such, the user can conduct ethereum transactions like taking a collateralized debt position with MakerDAO's stablecoin DAI, yet eventually cash out the results as bitcoin.

"Now bitcoiners can get loans and get access to DAI," Luongo said.

"All of us being able to get access to the equity of our bitcoin holdings would be pretty powerful."

Summa investor Charlie Noyes of Paradigm told CoinDesk tBTC represents "a meaningful improvement over previous efforts to make bitcoin more extensible," without compromising on bitcoin's security or decentralized ethos.

The working group's goal is to launch an ethereum-based tester app with access to bitcoin this fall and a tBTCmainnet by Q4. Keep investor Olaf Carlson-Wee of Polychain Capital told CoinDesk he sees this protocol as "Critical infrastructure" for the broader ecosystem.

Summa founder James Prestwich at the first Cross-Chain Working Group meeting in San Francisco.