Hashi, a new Bitcoin-based financial protocol, has been launched on the Sui Blockchain. BitGo, Bullish, and FalconX have already committed to participating in its launch planned for later this year.
Hashi was announced to Cointelegraph and is intended to give Bitcoin holders the opportunity to gain yield on their native Bitcoins (BTC) by onchain lending or borrowing. It targets a market segment which currently only represents a very small portion of Bitcoin’s global market.
Mysten Labs is the main contributor to Sui Blockchain. The protocol will focus initially on BTC-backed loans, which allows users to borrow Stablecoins from their own holdings. Institutions are expected to provide liquidity for the launch.
Adeniyi Abiodun is the co-founder of Mysten Labs and its CPO. He told Cointelegraph about how this protocol addresses structural issues that hindered Bitcoin’s adoption in decentralized financial systems, including the need for intermediaries, and the lack of transparency surrounding collateral.
It introduces programmatic collateral and onchain verification to improve BTC lending for institutions. “We are replacing ‘trust me’ workarounds with onchain verification,” Abiodun said.
Hashi will allow native BTCs to be used without wrapping or using synthetic assets in Bitcoin Finance. It brings transparency and automation to the management of collateral, two components institutions need to scale up Bitcoin.
According to onchain and the announcement, Bitcoin is largely untapped in decentralized financial protocols. Approximately 0.22%, or approximately $3.07billion, of its total supply has been deployed. data DefiLlama.
The rollout also includes participation commitments from custodians and infrastructure providers such as Ledger and Cubist, along with Sui-based DeFi protocols expected to support lending, custody and collateral management once the platform launches.
Hashi will use a combination multi-party computing custody, smart contracts and Sui for collateral management and lending. Audits and formal verification are planned prior to launch.
Other features include plans to issue Bitcoin-backed bond and insurance coverage of BTC collateral. Project is in the development stage, with an expected devnet and mainnet planned to launch later this year.
Related: Maestro launches mining-backed Bitcoin credit market for institutions
Bitcoin-backed lending rebounds after post-FTX collapse
The Bitcoin-backed loan markets have shrunk sharply since the 2022 collapse of crypto lenders BlockFi and Celsius Network: rehypothecation, opaque risk management and users exposed to substantial losses.
Rehypothecation – the practice of using customer collateral as a source of additional loans – increased systemic risks during this period, and led to an overall loss of trust in crypto lending platforms.
Recently, the interest in Bitcoin-backed loans has started to rise as companies and regulators explore new models which emphasize transparency, collateral and counterpart risk reduction.
Fannie Mae & Freddie Mac were asked by the US Federal Housing Finance Agency to determine whether cryptocurrencies are eligible for mortgages. borrower reserves in mortgage risk assessmentsThe move to recognize digital assets, such as Bitcoins, without the need for conversion into US dollar is a significant shift.
There are private companies that offer Bitcoin-backed lending. Jack Mallers announced in June that Strike has updated its Bitcoin-backed loans agreement so as to specify user collateral will be held on segregated wallets, and won’t be rehypothecated. “never has been, never will be,” According to a post On X.
Coinbase has re-introduced Bitcoin backed loans to the United States in January. This allows users who qualify to borrow USDC up to $100,000 against BTC they hold on their platform.
Ledn is not the only company that offers this service. offer loans against Bitcoin They also emphasize the need for stricter controls on risk and better custody.
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Source: cointelegraph.com
