As Bitcoin continues to stand as the most widely recognized and secure blockchain, its integration into decentralized applications (dApps) has become a key focus for developers aiming to harness its unparalleled network security and adoption. NEAR Protocol’s innovative chain abstraction stack presents a groundbreaking solution to this challenge. These technologies empower developers to execute their business logic and deploy smart contracts on NEAR’s highly efficient and scalable blockchain infrastructure, all while maintaining seamless control over Bitcoin accounts and assets natively.
This integrated approach seamlessly combines Bitcoin’s security with NEAR’s scalability, enabling the development of Bitcoin-native dApps that offer superior performance and an optimized user experience. From decentralized finance (DeFi) applications leveraging Bitcoin’s liquidity to novel cross-chain functionalities, this synergy unlocks an array of transformative possibilities without compromising on decentralization or scalability. By combining the strengths of both ecosystems, NEAR Protocol positions itself as a pivotal player in driving the evolution of blockchain interoperability and innovation.
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NEAR’s Abstraction Stack: The Basics
NEAR’s abstraction stack provides a suite of services that enable developers to build applications with seamless user experiences. Developers can use this stack to build Bitcoin-native dApps without requiring users to manage multiple wallets or understand cross-chain mechanics.
The two key components in the abstraction stack are Chain Signatures and Omnibridge.
Chain Signatures: Utilizing Multi-Party Computation (MPC), NEAR enables accounts and smart contracts on the NEAR blockchain to sign and execute transactions on external chains, such as Bitcoin. This allows dApps to interact with Bitcoin’s UTXO model, enabling advanced functionality like asset transfers or decentralized finance (DeFi) protocols.
Omnibridge: An aggregator of various message passing layers and light clients that enable NEAR smart contracts to access states on external blockchains including Bitcoin.
By combining these technologies, NEAR acts as a bridge to Bitcoin, where developers can harness Bitcoin’s security and decentralization alongside NEAR’s scalability and smart contract capabilities.
Architecture Overview
Business Logic on NEAR
Developers write smart contracts in NEAR’s WebAssembly-compatible languages (e.g., Rust or JavaScript).
The business logic resides on NEAR, leveraging its high throughput, low fees, and comprehensive developer tooling.
Bitcoin Integration with Chain Signatures
Bitcoin addresses are derived from NEAR accounts using deterministic algorithms.
The dApp’s smart contract on NEAR, sends a signature request to the NEAR blockchain, where the Chain Signatures protocol module (backed by MPC) signs Bitcoin transactions securely.
Signed Bitcoin transactions are broadcast to the Bitcoin network.
User Experience
Users interact with the dApp through a single account, which could be either a Bitcoin or NEAR account, without needing to manage separate wallets.
Tip: Check out this demo that shows using an existing Bitcoin wallet to interact with a dApp with smart contracts on NEAR through Satoshi Protocol
Gas fees can be subsidized using NEAR’s relayer infrastructure, ensuring smooth onboarding for non-crypto-savvy users.
Use Cases
BitcoinFi
Developers can build DeFi applications on NEAR, such as decentralized exchanges (DEXs), lending platforms, or yield farming protocols, while directly leveraging Bitcoin liquidity. For example:
Users deposit Bitcoin into native Bitcoin accounts, derived and controlled by Chain Signatures.
Tip: Satoshi Protocol already offers a solution for this, so developers can avoid building from scratch.
The dApp uses Chain Signatures to execute Bitcoin transactions, such as locking or transferring assets.
Business logic such as interest calculations, borrowing, and repayments are handled by smart contracts on NEAR.
Payment Gateways for Merchants
dApps can integrate Bitcoin payments for e-commerce or subscription services. The business logic (e.g., managing subscriptions, refunds, or loyalty rewards) resides on NEAR, while Bitcoin is used for actual payments.
Bitcoin payments are received with a native transfer to a Chain Signature derived account
Control of the payment flow e.g. subscription payments is signed using NEAR accounts.
Smart contracts on NEAR automate tasks like order processing or reward distribution.
Cross-Chain NFT Platforms
NFT marketplace on NEAR where users purchase NFTs using Bitcoin. The marketplace handles:
Bitcoin payments via Chain Signatures and Omnibridge.
NFT minting and trading logic on NEAR.
NFTs can also be minted on multiple chains leveraging Chain Signatures.
Bitcoin Custody Solutions
Using NEAR’s multi-chain capabilities, developers can create Bitcoin custody or wallet solutions that enable:
NEAR smart contracts to manage rules for multi-signature wallets e.g. a DAO.
Bitcoin transactions controlled via Chain Signatures.
Demo
The video below features a proof-of-concept from Satoshi Protocol, demonstrating seamless interaction with a lending platform on NEAR using existing Bitcoin wallets like Unisat, Xverse, and OKX. In this setup, NEAR smart contracts manage the core business logic, including interest calculations, borrowing, and repayments, while users enjoy a familiar Bitcoin-native experience:
Conclusion
NEAR’s abstraction layer introduces a transformative paradigm for Bitcoin-native decentralized applications (dApps), enabling developers to tap into the best of both worlds. By leveraging Bitcoin’s unmatched security, decentralization, and trust, alongside NEAR’s scalable infrastructure and advanced smart contract capabilities, this hybrid approach unlocks unprecedented possibilities for innovation.
Developers can build dApps that utilize Bitcoin’s robust network as the foundation for security and value, while employing NEAR’s high-performance blockchain for complex business logic, programmable interactions, and seamless scalability. This combination paves the way for groundbreaking use cases, from decentralized finance (DeFi) protocols leveraging Bitcoin’s liquidity to NFT platforms that capitalize on NEAR’s cost-efficient and fast transactions.
The seamless integration offered by NEAR not only bridges the gap between Bitcoin and modern smart contract ecosystems but also enhances the developer experience by simplifying cross-chain development. This, in turn, results in dApps that are not only secure and scalable but also intuitive and user-friendly. By providing a practical framework for interoperability and performance, NEAR empowers developers to build the next generation of Bitcoin-powered dApps, driving adoption, innovation, and value across the decentralized ecosystem.
Further Readings
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Disclosure: Proximity Labs holds $NEAR and other tokens or investments that may be associated with protocols or projects mentioned in this article. These statements are intended to disclose any conflict of interest and the content of this article should not be misconstrued as a recommendation to purchase or sell any token or to use any protocol. This article also contains forward-looking statements about third-party projects that the authors have no control over and, as such, actual future developments may be substantially different from the expectations described in the forward-looking statements for a number of reasons, including those that are not under the control of the authors. The content of this article reflects the opinions of its authors and is presented for informational purposes only. This is not and should not be construed to be investment advice.
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