Bitcoin & Cosmos: Nomic's Bringing Bitcoin to Cosmos

In a groundbreaking announcement made on October 3rd at Cosmoverse 2023, Nomic unveiled its transformative upgrade, set to reshape the Cosmos ecosystem. This upgrade is nothing short of revolutionary, as it introduces support for Inter-Blockchain Communication (IBC) transfers of native Bitcoin (BTC) within the Cosmos Network.

By doing so, Nomic addresses a long-standing challenge: seamlessly integrating BTC into the Cosmos ecosystem, ultimately unlocking a wealth of opportunities for users.

Nomic's IBC-Compatible nBTC

One of the key highlights of this monumental upgrade is the introduction of nBTC, an IBC-compatible token that allows users to leverage their native BTC holdings within the Cosmos-based blockchain environment. Unlike existing methods, this process involves minimal steps and eliminates the need for users to convert their BTC into a different cryptocurrency.

The upgrade represents a significant milestone in the development of Nomic's core bridge mechanisms, including robust security features such as the Emergency Disbursal and circuit breakers. Additionally, it marks the implementation of IBC on Nomic, positioning it among the pioneering non-Cosmos SDK blockchains to integrate IBC into their production.

Unlocking Dormant Bitcoin Supply

With the release of the nBTC Interchain Upgrade, Nomic is poised to become a vital on-ramp into the Cosmos ecosystem, effectively tapping into the dormant supply of over $500 billion worth of Bitcoin. This integration not only serves as a gateway but also brings an array of exciting DeFi products and opportunities to Bitcoin holders.

The nBTC Interchain Upgrade is set to go live on October 27, with activation expected on October 30.

Interchain Deposits Simplified

A standout feature of Nomic's upgrade is Interchain Deposits, offering users the ability to seamlessly send BTC to a deposit address and receive nBTC in their Cosmos account without any additional steps. This process mirrors the ease of depositing funds seen on centralized exchanges. Behind the scenes, a specialized Bitcoin script is utilized to move funds into the bridge and initiate an IBC transfer, ensuring a smooth experience for users.

Moreover, the simplicity of Interchain Deposits can be integrated into the frontend of any IBC-enabled blockchain, thanks to a user-friendly JavaScript library. Interchain Withdrawals are also supported, enabling users to enter a Bitcoin address to receive BTC on the Bitcoin blockchain promptly.

Kujira: Leading the Way

Kujira, an early adopter of Nomic's Interchain Deposits, emerges as a frontrunner in this transformative journey. Kujira boasts a vibrant ecosystem and community dedicated to creating fair and equitable markets, offering innovative DeFi products like the Sonar mobile wallet app and the decentralized USK stablecoin.

With the upcoming upgrade, nBTC will become usable on Kujira, enabling users to deposit BTC via the BLUE web application or Sonar mobile app, mint USK using nBTC as collateral, engage in borrowing and lending nBTC on GHOST, bid on liquidated nBTC on ORCA, trade with leverage, and much more.

Osmosis: The Cosmos Hub

Osmosis, serving as the central hub in the Cosmos ecosystem, stands out with the highest volume of IBC transfers to and from other chains. Following the Nomic upgrade activation, Osmosis users will gain the capability to deposit BTC directly into their accounts through the Osmosis Zone user interface. This will open doors to buying, selling, and providing liquidity for nBTC within Osmosis.

Levana: Riding the Wave

Built on Osmosis, Levana is a fully-collateralized perpetual swap exchange that has demonstrated remarkable trading volumes and growth. Like Osmosis, Levana users will have the privilege of utilizing nBTC directly within the platform.

Capacity Limit and Future Developments

During the early stages of the bridge, Nomic will implement a capacity limit of 21 BTC to ensure a controlled growth of the reserve. Once this limit is reached, applications will temporarily be unable to generate deposit addresses, and users will not be able to deposit additional BTC. Governance of this parameter will fall under the jurisdiction of Nomic DAO in an upcoming upgrade.

It's important to note that the NOM staking token remains non-transferrable and is not available on exchanges at this time. Nomic DAO governance will determine its future availability.

Nomic's recent announcement of its groundbreaking upgrade to support IBC transfers of nBTC within the Cosmos ecosystem marks a significant step forward in the world of blockchain and decentralized finance. This development not only simplifies the process of bringing Bitcoin into the Cosmos Network but also unlocks a world of exciting opportunities for both Bitcoiners and the Cosmos community as a whole. With the nBTC Interchain Upgrade set to launch later this month, the future of DeFi within Cosmos is looking brighter than ever. Stay tuned for ongoing enhancements, such as the adoption of Taproot-based threshold signatures, which will further enhance the efficiency and security of the Nomic bridge.

Thank you for reading Coin Club. This post is public so feel free to share it.