Zest Protocol Unveils Mainnet Demo for Bitcoin Collateral Vaults

Zest Protocol has launched a mainnet demo of its Bitcoin Collateral Vaults system, which allows native BTC to be used as collateral for USDC loans on Ethereum. The system keeps the Bitcoin in self-custodial Taproot vaults on the Bitcoin blockchain, never wrapping or bridging it.

Users deposit their BTC into individual vaults, and Ethereum smart contracts manage the USDC borrowing side of the position. Collateral destinations and return paths are pre-authorized by depositors when a vault is created, preventing misuse or unauthorized redirection.

The demo currently caps collateral deposits at 0.001 BTC per wallet to control exposure and test system functionality under constrained conditions.

This marks a significant shift in how Bitcoin-backed lending could work across chains, potentially eliminating the need for custodians or bridges that have historically added risk to these transactions.