Date - Cryptocurrency X Webflow Template
September 22, 2023
Reading Time - Cryptocurrency X Webflow Template
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 min read

How DLCs Secure Bitcoin On Chain without Validators

DLCs allow secure Bitcoin transactions on-chain, with attestors streamlining its integration into DeFi without third-party custodians.

DLCs, or Discreet Log Contracts, execute conditional Bitcoin transactions directly on the Bitcoin blockchain, eliminating the need for external validators. Essentially, your Bitcoin is never moved off to a vulnerable third-party; it's secured right where it belongs. 

Attestors are central to this secure transaction process and play a critical role in the ability to unlock Bitcoin into DeFi & more without relying on custodians.

The Role of Attestors

The attestor, an off-chain service, is instrumental in maintaining the integrity of every DLC transaction. Here's how they ensure everything runs seamlessly:

  1. Listening: The Attestor actively listens to smart-chains, such as Ethereum or Stacks, for events signaling the creation or closing of DLCs.
  2. Publication of Outcomes: When a DLC is opened, attestors get to work. They’ll publish all possible payout outcomes between the participants. Both participants then sign these predetermined outcomes, indicating their agreement & understanding.
  3. Verification: Participants, with their wallets, use the attestors' public keys to verify every message. This ensures what's being agreed upon is genuine and hasn't been tampered with.
  4. Transaction Building: Participants exchange partially-signed transactions, each representing a potential outcome. Together, they then broadcast a funding transaction. This act effectively locks the Bitcoin on-chain.
  5. Attestation & Payout: Once the payout outcome is determined, the attestor signs its attestation. Either participant's wallet can then use this to execute the Bitcoin transaction seamlessly.
  6. Safety: A fundamental design choice of DLCs ensures the safety of your Bitcoin. At no point does the locked Bitcoin go to attestors. So even in an unlikely scenario where an attestor is compromised, the Bitcoin stays safe on-chain.

DLCs can be utilized with various DeFi solutions including those on Bitcoin L2s like Stacks, and smart contract chains such as Ethereum and Solana. With this powerful ability provided directly by Bitcoin itself, moving BTC in smart contracts is becoming a widespread use-case with significantly fewer drawbacks than existing methods like bridging & wrapping. 

Get in Touch

Our attestors facilitate a seamless integration of Bitcoin with DeFi. Interested in this approach? Engage with our chatbot below to discuss potential integration and collaboration opportunities. For more information visit our Docs or join us on Discord and Twitter.