Jasper Vault Launches Timelock Options: A New Narrative for Bitcoin’s Peer-to-Peer Ecosystem

24-05-09 11:06

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Original source: Jasper Vault

From May 9 to 10, Bitcoin Magazine held the first Global Bitcoin Conference in Hong Kong. As a staunch successor to peer-to-peer decentralized finance, Jasper Vault launched a peer-to-peer option trading product for native Bitcoin Layer 1 assets during the conference - Hash Timelock Contract Options (HTLC Options). Timelock options use hash timelock contracts to make the payment of option strike price a condition of the timelock contract without changing the native Bitcoin peer-to-peer payment characteristics, and combine the Taproot signature algorithm to implement a peer-to-peer option trading protocol on the Bitcoin native chain.

The Bitcoin DeFi route proposed by Jasper Vault is obviously different from the currently popular Bitcoin Layer 2 Wrapped Tokens or cross-chain bridges. Jasper Vault's timelock option protocol allows option buyers to use stablecoin USDT to pay option fees on the EVM chain, while the option underlying is still Bitcoin itself. Liquidation still uses Bitcoin Layer 1 and does not need to leave the UTXO account of the Bitcoin network. Therefore, there is no need to cross the chain bridge or convert to any wrapped token during the transaction, perfectly preserving the security of Bitcoin's peer-to-peer decentralization.

When using the Time Lock Option Protocol, users need to hold two wallets at the same time: a Bitcoin wallet (such as Ledger) and an EVM wallet (such as MetaMask). Peer-to-peer interoperability consists of two parts. The delivery of the option underlying Bitcoin is carried out in the UTXO account of Bitcoin Layer 1, while the payment of option fees and exercise prices is completed on the Ethereum (Layer 1 and Layer 2) chain using stablecoins (such as USDT) through the corresponding abstract accounts (ERC-4337, Account Abstraction) of both parties. The Time Lock Option Protocol is also compatible with the use of Program Derived Addresses (PDAs) on Solana to complete option exercise.

Jasper Vault provides a way to introduce Bitcoin, the most important asset in cryptocurrency, to Ethereum Layer 1, Layer 2, and Solana chains without changing the peer-to-peer native ecology of Bitcoin Layer 1. In this way, while maintaining the basic peer-to-peer ecology, full interoperability between cross-chain accounts is achieved.

The core technology of Bitcoin time-lock options is based on hash time locks and Taproot multi-signatures combined with the programmability of the smart contract public chain, providing decentralized financial options trading of native Bitcoin. Its advantages include:

1. Inheriting the Bitcoin peer-to-peer ecology:The two parties to the transaction implement transactions on the infrastructure of the smart contract chain and the Bitcoin script based on the Taproot upgrade in accordance with the prior agreement, without the intervention of a third-party institution, to complete the entire transaction process.

2. BTC native asset security:There is no need to transfer BTC assets to accounts controlled by a third party or convert them into Wrapped Tokens. Before the option transaction, the BTC assets are locked in the multi-signature address UTXO account based on the Schnorr signature. After the option is exercised, according to the option transaction logic, the assets are transferred to the UTXO account of the trading party through the Schnorr signature method, ensuring that the BTC assets are protected by the Bitcoin Layer 1 network in the safest way during the entire option transaction.

3. Cross-chain interoperability:Although Bitcoin assets are stored in UTXO accounts, option fees and exercise price payments occur on other smart chains. The time-locked option protocol can adapt to EVM Layer 1 and Layer 2 public chains based on abstract accounts, and is compatible with Solana's PDA address to achieve cross-chain interaction and interoperability between accounts.

Jasper Vault's option protocol for Bitcoin native assets uses the Bitcoin network's own time lock technology and Taproot signature to directly introduce decentralized option business to the Bitcoin Layer 1 native chain while maintaining peer-to-peer cash payments and option protocols. Users holding Bitcoin can obtain additional option fee income by selling call Bitcoin options (Covered Call) in the UTXO account, or hedge their Bitcoin holdings by purchasing put options (Protective Put). For those staunch Bitcoin believers who want to earn income from their idle Bitcoins but do not trust other public chains, Jasper Vault provides an almost perfect solution. This solution allows Bitcoin holders to participate in option trading on the Bitcoin native chain while maintaining asset security and decentralization.

Jasper Vault's time-locked options protocol is currently online in beta. In the future, the time-locked options protocol will continue to be improved based on user and community feedback, and will be further connected to other public chains. At the same time, more application scenarios beyond options will be developed, and it is committed to building a peer-to-peer decentralized financial system that maintains the original ecology of Bitcoin. This effort is all about returning to the original intention, that is, to realize a peer-to-peer electronic cash payment and options protocol, providing Bitcoin holders with more financial tools and opportunities to participate, while maintaining its original ecological characteristics and decentralized concept.