Portal to Bitcoin aims to transform Bitcoin into a practical foundation for DeFi applications while maintaining user control and self-custody.
The excitement around Bitcoin (BTC) has soared to new heights following the United States election, with a ripple effect spreading across the entire market. The total crypto market cap has reached a record $3.12 trillion, rivaling France’s GDP.
Analysts suggest that Bitcoin still has more ammunition and has almost hit a six-figure valuation. Yet, behind these eye-popping headlines lies a reality check: deep-rooted challenges continue to hinder the growth of both Bitcoin and the broader decentralized finance (DeFi) sector.
Persistent issues like scalability, which limits the network, and security risks in custodial systems, where users must entrust their assets to third parties, remain critical obstacles to creating applications that users need to interact across blockchains. Also, high transaction costs are deterring everyday users, while the ongoing difficulty of integrating assets across different blockchains only exacerbates these challenges.
Fortunately, evolving technologies offer promising ideas to tackle the fundamental challenges of the crypto industry.
Meeting the scalability demand
Portal to Bitcoin, a bridgeless crosschain infrastructure built for Bitcoin, offers a unique approach that it advocates as the “holy grail” of Bitcoin scaling to address the growing need for scalability and efficiency in the Bitcoin DeFi ecosystem through its new infrastructure, BitScaler. Unlike traditional scaling solutions that rely on custodial bridges or vaults, BitScaler employs a non-custodial model, allowing users to maintain complete control of their assets during the entire spectrum of DeFi operations.
Portal eliminates custodial risks and bridges, keeping users in control of their assets across chains. Source: Portal to Bitcoin
At the heart of BitScaler’s technology is the “modified channel factory,” an innovative method designed for the Bitcoin network. Channel factories consolidate thousands of offchain payment channel-like transactions into a single onchain action. Simply put, instead of processing each transaction on the main Bitcoin blockchain, BitScaler groups them offchain, interacting with the main network only when necessary.
By moving thousands of transactions offchain, BitScaler reduces congestion on the Bitcoin blockchain, lowers transaction fees and boosts transaction throughput. As a result, the network can handle a higher volume of transactions efficiently, facilitating the growth of complex DeFi applications while preserving Bitcoin’s trust-minimized integrity.
Custodyless crosschain infrastructure
BitScaler also focuses on enabling crosschain interoperability without relying on custodians. It offers a native Bitcoin, trustless automated market maker (AMM), allowing seamless asset swaps across various blockchain networks using atomic swaps. The platform accomplishes this without using bridges, wrapped derivatives or synthetic tokens, which are artificial replicas of real assets or centralized bridges, third-party services that facilitate asset transfers between blockchains.
Behind the scenes, BitScaler’s multiparty channel factories (MPCh) technology forms a unique layer that enhances the scalability of Bitcoin’s payment channels. MPCh allows efficient liquidity pooling by consolidating data and cryptographic proofs. As the onchain footprint decreases, transaction fees are reduced, making it simpler to integrate diverse assets into the Bitcoin ecosystem.
MPCh introduces a layer between Bitcoin L1 and the Lightning Network’s payment channels. Source: Portal to Bitcoin
To overcome Bitcoin’s technical limitation, where participants must remain online for complex transactions, BitScaler introduces a non-custodial signing delegation mechanism. The model adds a third layer on top of MPCh sub-channels, allowing a delegate to function as a co-signer without taking custody of user assets.
New possibilities in Bitcoin DeFi
Alongside the launch of BitScaler, Portal has achieved a major milestone by raising $34 million in a seed funding round following a pre-seed of $8.2 million, raising a total in excess of $42 million. The company plans to use all investment and its expertise in crosschain atomic swaps to impact the Bitcoin DeFi landscape significantly.
According to CEO Chandra Duggirala, the new platform enhances Bitcoin’s role in DeFi by providing a scalable, custodyless infrastructure that integrates seamlessly with other blockchains. “With BitScaler, we’ve not only solved the long-standing challenges of Bitcoin scaling but also unlocked new possibilities for the entire crosschain ecosystem, with the aim of solving the crosschain custody forever” he stated.
Looking ahead, Portal aims to expand its decentralized exchange (DEX) offering and introduce non-custodial DeFi primitives such as perps and lending for secure, crosschain asset transfers, removing the need for intermediaries.
As initiatives like Portal take shape, the industry’s trajectory will depend on how effectively emerging technologies can overcome existing barriers and unlock the full potential of the decentralized financial ecosystem.
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