Zest Bets Big on Self-Custodial Bitcoin Vaults for DeFi

Zest Protocol has launched a capped mainnet demo of its Bitcoin Collateral Vaults, allowing users to borrow against their BTC without wrapping it first.

The vaults are self-custodial and governed by Bitcoin's own rules, ensuring that the coins remain on the Bitcoin blockchain. Each vault holds one user's BTC, with no pooling of funds from different users.

In the demo, a loan is drawn in USDC on an Ethereum chain, while the BTC stays in the vault. Borrowers can add collateral or withdraw excess funds if the price of Bitcoin rises.

However, Zest plans to shift the role of guardians to BitVM, which will verify computations on Bitcoin without changing its rules. This design aims to reduce costs and increase efficiency.