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Interlay

Interlay

Interlay (INTR) is a decentralized network designed to connect cryptocurrencies like Bitcoin with DeFi platforms like Polkadot and Ethereum. The Interlay network is being developed as a Polkadot parachain and will be connected to Cosmos, Ethereum, and other major DeFi networks.

interBTC is Interlay's flagship product - bitcoin on any blockchain. An asset fully backed by Bitcoin 1:1 and censorship resistant.

INTR is the Interlay control token. The main purposes of the token:

Participation in management - making proposals for management and voting on them

Commissions and Rewards - Interlay will pay transaction fees in INTR and other digital assets.

The final number of INTRs is not limited, but the following issuance schedule is provided:

1 billion (1,000,000,000) INTR will be issued within the first 4 years

2% will be issued subsequently as annual inflation, in perpetuity

INTR follows a fair launch pattern. INTR tokens are distributed among network members, developers and early sponsors in two forms: airdrops + block rewards. It is important to note two points:

There will be no public sale or ICO

Interlay has been community driven since day one

Distribution of the original 4-year INTR supply:

70% distributed to the community as airdrops + block rewards

20% distributed to the Interlay team + early sponsors through gradual unlocking

10% is dumped into the Fund's reserve for ecosystem growth and future development.

Crowdloan #1

10% INTR is given to the community at launch using crowdloan public voting data as the distribution mechanism. Of them:

- 30% liquidity will be allocated at the time of the giveaway

- 70% will be subject to a linear rollover over the 96 week parachain slot rental period

The remaining 90% of INTR will be distributed as follows:

On-chain Treasury - 25%. Controlled by a control protocol that can use funds as needed. These INTRs are reserved for future crowdloan campaigns, LP rewards, ecosystem funding + potential rainy day fund.

Rewards for blocking in Vaults - 30%. Vaults receive INTR as payment for blocking BTC and providing the necessary insurance coverage in DOT and other assets. Early repositories receive more rewards as they take on more risk in terms of protocol maturity.

Staking for voting - 5%. In order to participate in chain governance, INTR holders must lock their tokens using the parachain. Participants receive an INTR block reward proportional to their share in the total INTR blocked for voting.

Interlay team - 20%. Current and future team + early sponsors who funded early development.

Fund reserve - 10%. Designed to fund ecosystem growth and future development.

Exactly 4 years later and the full distribution of the initial supply of 1 billion INTR, the protocol will initiate a 2% annual inflation that will continue indefinitely.

The new INTR will be fully distributed to the community!

Interlay will participate in the Polkadot parachain auctions + support the crowdloan so that the community can vote:

Target slot: 6-10

Rental period: 96 weeks (maximum rental period)

Max. lock target: 50,000,000 hard caps (21,000,000 soft caps if clear leader)

Interlay is a decentralized network dedicated to connecting crypto-currencies like Bitcoin with DeFi platformslike Polkadot and Ethereum. The Interlay network is hosted as a Polkadot parachain and will be connected to Cosmos, Ethereum and other major DeFi networks.

About Interlay

We envision a future where blockchains seamlessly connect and interact: anyone can use any digital asset on any blockchain, trustless and without limitations. We work with Bitcoin, Ethereum, Polkadot, Cosmos and others to expand interoperability, capital efficiency and openness.

Our flagship product is interBTC — Bitcoin on any blockchain. A 1:1 Bitcoin-backed asset, fully collateralized, interoperable, and censorship-resistant, realizing the true free nature of BTC and decentralized finance. Kintsugi is our canary network on Kusama — the innovation hub of the Interlay network.

interBTC: Decentralized and Insured BTC DeFi

interBTC, Interlay’s flagship product, is Bitcoin on any blockchain. A 1:1 Bitcoin-backed asset, fully collateralized, interoperable, and censorship-resistant.

Clearly, there needs to be a better way to bridge Bitcoin and similar assets. What use is the decentralization of DeFi, if we’re using a centralized bridge to get there? We all know: a chain is only as strong as the weakest link.

Interlay’s interBTC brings decentralization and economic security to custodial bridges. It is based on the XCLAIM protocol, published back in 2018 as a peer-reviewed security paper by Interlay co-founders — with significant practical improvements conceived in the years since then.

The interBTC lifecycle: from BTC to DeFi and back in a few simple steps.

To mint interBTC, users lock BTC with custodians — so called Vaults. Yet Vaults are not trusted. They must lock collateral in various assets, such as DAI, DOT, USDC, with the interBTC bridge (more precisely, the Interlay parachain on Polkadot). If a Vault steals or loses BTC, their collateral is slashed — and users reimbursed.

This simple, but effective principle, together with sophisticated collateral balancing, cross-chain verification and governance mechanisms, earns interBTC three key properties:

  • Radically open. Anyone can become a custodian of BTC (= Vault), anytime. Anyone can keep their own BTC in custody. Vaults can implement additional security measures like threshold signatures, trusted execution environments, MPC protocols and the like. But they don’t have to. If one Vault goes down, it will not affect the other Vaults in the network. No-one can stop anyone from running a Vault.
  • Secured by Insurance. Every custodian of BTC (= Vault) must provide more collateral than the value of BTC they are keeping in custody. Vaults lock collateral on the bridge in various digital assets. If Vaults misbehave, their collateral is slashed and users reimbursed. Users only trust that Bitcoin and the DeFi platform they use are secure.
  • Community-owned. Any user and custodian providing liquidity to the bridge (BTC, KSM, DOT,…), KSM/DOT crowdloan contributors, early backers, and builders will steer the success of the network via their governance tokens. They control the collateral assets, economic parameters of the system, and future innovations.

Trusted and centralized bridges (left) vs. interBTC’s decentralized and economically trustless design (right).

From interBTC to Multi-Chain DeFi Network

As a starting point, the interBTC Core Bridge will be expanded in four dimensions:

  • Assets. More underlying assets, such as DOGE, LTC, ZEC and any chain where cross-chain light clients are not feasible, can be bridged using Interlay’s technology. We will be encouraging and supporting the community expanding the bridge — it will not only be Interlay who can and will extend the system. Interestingly, the framework works not only for crypto, but also real world assets
  • Networks. From Kusama and Polkadot, interBTC and all other bridged assets will be made available to all major networks. The work on Ethereum and Cosmos has already commenced. Others will follow soon.
  • Collateral. As a multi-collateral system, a diverse set of backing assets with different risk profiles is critical for security, but also economic efficiency. Interlay will support the community in identifying and analyzing suitable collateral candidates, varying from stablecoins, LP tokens, liquid staking assets, perhaps even NFTs.
  • Trust. Finally, the bridge can be extended to support other, less decentralized trust models. While not the ultimate goal, smaller communities struggling to attract sufficient backing collateral may e.g. opt for hybrid models, where a some level of trust is required but a partial insurance is provided. Communities will be free to use the Interlay Network to bridge other assets in whatever way they feel is best suited. In some cases, e.g. real world assets, a fully trustless setup might not be possible by design.

Bridged Based Products

With the already announced support for smart contracts (EVM / WASM support on the roadmap), tailored to Bitcoin and any other assets bridged via the Interlay Network, a completely new pallet of products can be built by the community. For example, in the early days, Interlay once built a prototype for a decentralized BTC options platform with new forms of hedging and trust-minimized leverage. This and many more can be built on top of the Interlay Network using an optimized set of cross-chain functions.

Integrations

The decentralized and trustless nature of interBTC must be accompanied by a simple UX — users should not be forced to choose between security and usability. As such, wallets and on- and off-boarding via exchanges will play an important role in adoption and will be the focus our Interlay’s efforts early on.

Timeline

December 21, 2021
Interlay raises a $6,500,000 venture round from D1 Ventures, Digital Finance Group, Hypersphere Ventures, IOSG Ventures, KR1 plc, Nexo and Signum Capital.
December 14, 2021
The Interlay Parachain Crowdloan
July 5, 2021
Interlay raises a $3,000,000 seed round from Blockchain.com Ventures, CMS Holdings, Hypersphere Ventures, IOSG Ventures, KR1 plc, LAUNCHub Ventures and Zee Prime Capital.

Funding rounds

Patents

Further reading

Title
Author
Link
Type
Date

Interlay - Medium

Web

February 2, 2022

Documentaries, videos and podcasts

Title
Date
Link

Interlay's 2021: A Year of Development and Growth - Interlay - Medium

December 31, 2021

The Future of Interoperability - Interlay - Medium

October 25, 2021

The Interlay Parachain Crowdloan Opens on 14 December

December 10, 2021

References

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