Harvard students propose using Elastos technology to build a BTC-backed stablecoin

A team of Harvard students and alumni, under the name of the New Bretton Woods (NBW) Lab, has proposed a stablecoin backed by BTC.

The whitepaper was released in late November, providing a detailed introduction to the development of Native Bitcoin Stablecoin (NBS), a BTC-supported stablecoin built on the BTC-Elastos Layer 2 (BeL2) protocol.

During an exclusive interview with The StreetRoundtable, the NBW team and BTC Elastos Layer 2 Operations Manager Sasha Mitchell discussed the vision of NBS.

Driven by the optimistic sentiment towards President-elect Donald Trump's pro-crypto policies, BTC hit a historical high of $107,000 on December 17th.

The native BTC stablecoin is pegged to the US dollar at a 1:1 ratio, allowing BTC holders to use their assets without selling them. This means that they can use BTC as collateral to mint NBS, and then use the stablecoin for lending or providing liquidity on DeFi platforms.

"Stablecoins backed by Bitcoin are both an opportunity and a necessity. Using BTC as collateral provides a stable, secure financial tool while adhering to the principles of decentralization," said Jacob Li, Operations Director of NBW Labs.

This is not the first project to launch a stablecoin supported by BTC. DoC is a stablecoin collateralized by BTC, launched by Money On Chain in July, with a market value of $2.88 million. In comparison, the largest stablecoin Tether (USDT) has a market value of $167 billion.

BeL2 Protocol

The BeL2 protocol is different from other BTC layer 2 solutions, such as the Lightning Network or Stacks.

Although these Layer 2 solutions mainly focus on payments, BeL2 goes further, supporting smart contracts and DeFi operations, while keeping BTC on its main chain.

Mitchell explained, "The Lightning Network mainly focuses on payment functions, while BeL2 supports comprehensive smart contract functions and DeFi operations, while maintaining the strong security model of Bitcoin. This allows users to participate in complex financial operations without moving BTC off the main chain."

Another key innovation is the arbitration network, which adds an extra layer of security. Arbitrators use Elastos token (ELA) as collateral to create economic incentives for honest behavior and protect cross-chain operations.

Safety first

Mitchell outlined a multi-tier approach to ensure asset transfer between BTC and EVM-compatible chains.

"The zero-knowledge proof layer is the foundation of our security model. All BTC transactions need to generate valid zero-knowledge proofs through our Cairo Circuit and then be independently verified by multiple arbiters," Mitchell added.

One of the most notable aspects of NBS stablecoin is its potential to unleash the potential of BTC. The NBW team envisions BTC becoming a core participant in decentralized finance, providing an alternative to inflation-prone fiat currencies.

The NBW team stated, "Unlocking the potential value of BTC through stablecoin release has opened up new possibilities for decentralized finance while maintaining the strong security of BTC."

This feature makes NBS particularly attractive to long-term BTC investors who wish to hold assets but still take advantage of DeFi opportunities.

Developer-friendly ecosystem

The team also hopes to make it easier for developers to develop applications using Bitcoin. To this end, they have created a toolkit that simplifies the process.

The spokesperson of NBW stated, 'The SDK abstracts the complexity of cross-chain development, allowing developers to use familiar EVM tools while leveraging the liquidity and security of Bitcoin (BTC).'

The team has also launched funding and hackathon events to encourage more developers to participate.

"Although NBW's current focus is on improving EVM chain compatibility and establishing a solid foundation for the BeL2 protocol, we maintain an open architecture that will not hinder future expansion into other blockchain ecosystems. Our top priority is to ensure seamless integration with EVM-compatible chains," the team added.