Through the Chakra protocol, Bitcoin holders can enjoy multiple benefits without worrying about the security issues of re-pledging.

Author: Chakra

Translation: DeepTechFlow

Introduction

With the market warming up, the current market value of Bitcoin has reached an astonishing $1 trillion, positioning itself as a form of digital gold. However, most of the time, it is mostly idle assets. Most bitcoins are stored idle in users' cold wallets and various exchanges around the world, rather than actively participating in the blockchain network or generating benefits for the holders. Therefore, the potential of Bitcoin far exceeds its current usage and application scope.

The goal of the Chakra protocol is to establish a secure proof of Bitcoin stake system, activate the liquidity of long-term held Bitcoin assets, and provide decentralized services maintained by asset holders. As a Bitcoin re-pledge protocol, it aims to utilize the most powerful blockchain network to protect new chains and applications, using cutting-edge zero-knowledge proof technology to unlock the economic potential for Bitcoin holders.

The challenge is obvious. Bitcoin holders are eager to benefit from staking rewards without compromising the security of their Bitcoin.

How Chakra Works

Chakra steps forward to address this issue. Through the Chakra protocol, Bitcoin holders can enjoy multiple benefits without worrying about the security issues of re-pledging.

What makes Chakra protocol unique in Bitcoin re-pledging?

Self-custody Pledging

Bitcoin enthusiasts trust Bitcoin because of its highly decentralized nature and robust security. Therefore, compromising security for staking rewards may be a major concern. Our solution allows Bitcoin holders to pledge without transferring assets out of their own wallets. This is achieved using time-locked scripts to ensure no third-party risks are involved.

ZK-based Pledging Proof

In our solution, the pledging event of Bitcoin is proven through zero-knowledge proofs, which can be verified off-chain to access on-chain information without connecting to the Bitcoin network. We will use STARK to implement the proof system. Compared to SNARK, STARK provides a zero-knowledge proof solution that does not require a trusted setup, while its mechanism ensures enhanced security.

Re-pledging Services

Pledging proofs can be verified in various places, granting pledgers multiple rights and providing a range of services maintained by pledgers. Each right or service can be customized to meet specific needs, such as AI, DeFi, games, etc., all for the convenience and protection of Bitcoin holders. Bitcoin holders only need to pledge once, and then they are authorized to expand Bitcoin in many ways.

Applications of Chakra

The Chakra protocol supports various Bitcoin applications, leveraging the strong security of Bitcoin while releasing the liquidity of Bitcoin assets.

Paving the way for new Bitcoin second layers

Pledging proofs can be verified on the second layer of Bitcoin, allowing pledgers to participate in the consensus and governance of the second layer. These second layers share the security of Bitcoin, providing data availability services and execution environments maintained by pledgers. For example, we can launch a Bitcoin second layer maintained by pledgers and run it with Cairo VM.

Bringing various benefits to pledgers

Pledging proofs can be used to create derivatives of Bitcoin assets, providing opportunities for users to use Bitcoin-backed assets in DeFi protocols. For example, similar to stETH in the Ethereum ecosystem, we can use the Chakra protocol to issue stBTC and build DApps to interact with it.

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