Zenrock: Paving the Path in dMPC

One of the most consistently discussed, yet significant challenges in the current blockchain landscape is liquidity fragmentation across various, seemingly interoperable blockchains. As more blockchain platforms and protocols have emerged, assets have been dispersed across these chains, and the current technical landscape makes it difficult to move assets from one blockchain to another creating inefficiency in the utilization of liquidity.

While many solutions have been developed to address this gap, they often face critical shortcomings such as centralized custody risks, fragmented blockchain support, and inefficiencies in scalability and trust. This report explores Zenrock’s innovative approach to cross-chain communication through its distributed Multi-Party Computation (dMPC) technology and the transformative applications it enables, with a focus on Zenrock’s wrapped BTC product.

Current State of Cross-Chain Interactions

To fully understand where we are now, we need to start from the beginning. The concept of “cross-chain interactions” was first introduced by the Tendermint team in 2014, but did not gain the mindshare of researchers until Vitalik Buterin published an article “Chain Interoperability” in 2016 at the R3CEV conference. Since then, many of the brightest minds in blockchain have been working to tackle the challenges of cross-chain interoperability. Significant progress has been made but the current solutions still leave much to be desired.

Current cross-chain solutions, such as token bridges, account for ~$24bn in transaction volume per month and secure over $41b TVL, but often rely on centralized or semi-centralized entities. This centralization raises well-founded concerns about trust and security, amplified by several high-profile and costly bridge attacks in recent memory. Many of these attacks exploited vulnerabilities in compromised multi-signature keys, highlighting the risks inherent in centralized and semi-centralized solutions. The most notable hacks total over $965 million and include:

The Ronin Bridge hack on March 23, 2022 resulted in the theft of $650 million (173,000 Ether and 25.5 million USDC) and went undetected for six days.
The Multichain 3 hack on July 6, 2023 led to $126 million of DAI, LINK, USDC, WBTC, and wETH.
The Harmony Horizon Bridge hack on June 24, 2022 saw $100 million stolen due to compromised private keys.
The Orbit Bridge hack on December 31, 2023 cost $82 million in ETH, USDT, USDC, WBTC, and DAI due to compromised private keys.
The earlier Multichain 1 (Anyswap) hack on July 10, 2021 resulted in $7.9 million in funds stolen due to a compromised MPC private key.

Despite significant advancements in cross-chain solutions, there are still limitations around security, scalability, and decentralization.

Current State of Key Management in Blockchain

Cross-chain interactions are typically secured by one of three common key management solutions: multi-signature (multi-sig) wallets, traditional MPCs, and decentralized MPCs (dMPCs).

Multi-sigs enhance security by requiring multiple signatures from different parties to execute transactions but suffer from operational inflexibility, as a separate vault must exist on each chain and multiple users must manage private keys for each vault, increasing complexity and potential security gaps.
Traditional MPC improves on multi-sig by distributing private key shards across multiple parties operated by a single centralized entity. The centralized nature and off-chain design of traditional MPC limit its scalability and effectiveness in decentralized systems.
Decentralized MPC (dMPC) networks advance key management by distributing key generation and signing processes across independent nodes, minimizing trust assumptions and eliminating centralized control.

Zenrock’s dMPC network further enhances this approach with innovative features tailored for multichain functionality. Built on zrChain, a custom blockchain using the Cosmos SDK, and zrSign, smart contracts for secure cross-chain applications, Zenrock enables scalable and trust-minimized interactions across blockchain ecosystems.

Zenrock’s dMPC network also addresses the challenges of blockchain fragmentation by simplifying custody, transaction management, and messaging across multiple blockchains. By eliminating reliance on centralized bridges and their vulnerabilities, such as single points of failure and exploits, Zenrock uses MPC-generated keys that function natively across supported blockchains. The protocol proactively safeguards against node collusion by encrypting and rotating key material at a configured epoch. Furthermore, network resilience and performance is determined via an election process, which ensures nodes required to fulfill the threshold signature request are available.

This chain-agnostic, high-performance protocol encourages developers to build innovative user-facing applications with the support of zrChain and zrSign. By removing the complexities of cross-chain communication and providing native-level security and performance, Zenrock empowers developers to focus on innovation. Its decentralized, trust-minimized infrastructure sets a new standard in blockchain key management, making it a critical enabler for the next generation of blockchain applications.

The Wrapped Bitcoin Landscape

Wrapped tokens are digital assets designed to bridge the interoperability gap between different blockchains. These tokens represent an equivalent value of another cryptocurrency, allowing assets like Bitcoin to interact seamlessly with ecosystems such as Ethereum or Solana. By enabling cross-chain functionality, wrapped tokens play a pivotal role in the decentralized finance (DeFi) landscape, unlocking new possibilities for users and developers alike. The creation of a wrapped token involves locking the original cryptocurrency in a secure custodial system or decentralized infrastructure, followed by minting a corresponding token on the target blockchain.

In DeFi, wrapped tokens enhance liquidity by making capital from one blockchain available on others, fostering efficient fund movement and expanding the range of accessible financial services. They enable users to leverage the strengths of multiple blockchains, such as Bitcoin’s value and Ethereum’s programmability, without sacrificing their native holdings. This innovation not only increases liquidity across platforms but also reduces fragmentation in the crypto ecosystem, accelerating the adoption of decentralized finance.

BitGo’s wBTC

First introduced in 2019, as a joint venture between BitGo, Kyber Network, and Ren, Wrapped Bitcoin (wBTC) was the first product to bridge Bitcoin’s value with Ethereum’s decentralized finance (DeFi) ecosystem, offering a 1:1 BTC-backed token usable in a variety of DeFi applications. wBTC was initially launched as an ERC-20 token on Ethereum, but expanded to include TRC-20 functionality on TRON in December 2020. This multi-chain operability allows users to mint and redeem wBTC on both Ethereum and TRON networks, providing increased flexibility for utilizing Bitcoin in on-chain applications. Since its inception, wBTC has seen significant adoption and is by far the largest wrapped Bitcoin product, holding approximately $13.2B TVL at the time of this report.

Coinbase’s cbBTC

Fully backed 1:1 by native Bitcoin held in Coinbase’s institutional-grade custody, cbBTC leverages a secure custodial model that combines hot and cold wallet storage with rigorous cryptographic protections. Users can mint cbBTC by transferring Bitcoin from their Coinbase accounts to supported blockchains, including Ethereum, Base, and Solana, where the token is seamlessly integrated with DeFi protocols. Conversely, users can burn cbBTC to redeem their native Bitcoin by depositing the token back into their Coinbase accounts. cbBTC emphasizes accessibility with no fees for minting or burning, making it an attractive option for users seeking a cost-effective way to participate in DeFi. Coinbase’s regulatory compliance across jurisdictions, including adherence to KYC and AML standards, reinforces its trustworthiness as a custodian. While cbBTC offers the benefits of institutional security and compliance, its centralized nature underscores the ongoing trade-offs between convenience, security, and decentralization in the evolving landscape of wrapped Bitcoin solutions. Currently, cbBTC has ~$2.45B TVL with the majority of that being on Ethereum mainnet.

Threshold’s tBTC

tBTC is a fully decentralized and permissionless wrapped Bitcoin protocol that allows users to mint a tokenized version of Bitcoin on Ethereum, Ethereum Layer-2s, and Solana. Backed 1:1 by Bitcoin and secured through Threshold Network’s cryptographic infrastructure, tBTC provides Bitcoin holders with a trust-minimized way to access Ethereum’s DeFi ecosystem without relying on centralized custodians. Unlike centralized solutions like wBTC and cbBTC, which depend on custodians such as BitGo and Coinbase, tBTC operates entirely through a decentralized network of node operators. These nodes secure Bitcoin deposits using multi-signature wallets managed by threshold cryptography, ensuring no single entity has control over the funds. The minting and redemption processes are permissionless, allowing anyone to lock BTC and receive tBTC or redeem tBTC for Bitcoin without intermediaries. This decentralized design reduces risks of censorship, counterparty failure, and asset freezing, while maintaining transparency through publicly verifiable on-chain operations. Currently, tBTC has ~$480m TVL, most of which is located on Ethereum mainnet.

Lombard’s LBTC

LBTC is a universal liquid Bitcoin standard, offering a yield-bearing, cross-chain-compatible token backed 1:1 by native BTC. It integrates Bitcoin into decentralized finance (DeFi) by enabling secure and seamless movement across major blockchain ecosystems. LBTC earns native yield through Babylon staking and Lombard Lux while allowing holders to deploy their tokens in DeFi protocols for lending, liquidity provision, and yield optimization.

LBTC’s security model relies on a consortium of decentralized ecosystems, reducing counterparty and bridge risks associated with centralized solutions. Its 1:1 BTC backing ensures liquidity, while cross-chain compatibility and multi-yield opportunities make it a versatile tool for both individual and institutional holders. Currently, LBTC has a TVL of $1.92B with the majority being on Ethereum mainnet.

zenBTC: Native-Yield Bearing Wrapped Bitcoin

Built using Zenrock’s distributed multi-party computation technology, zenBTC is an innovative wrapped Bitcoin solution designed to bring Bitcoin into the DeFi world with enhanced functionality. zenBTC provides a secure, yield-bearing, and multichain-compatible BTC asset that integrates directly with DeFi applications across various blockchains, with a specific focus on the Solana ecosystem. Zenrock has chosen to focus mainly on the Solana ecosystem (as well as other high performance alt-L1s in the future) due to its significant growth in virtually every measurable category, especially DeFi activity.

zenBTC operates through a trusted, decentralized custody mechanism, where users deposit Bitcoin into an address managed by the dMPC network, which then mints an equivalent amount of zenBTC as a wrapped BTC token. This wrapped token can be used across compatible DeFi platforms enabling users to deploy BTC liquidity seamlessly within the Solana, Ethereum, or Cosmos ecosystems. When users are ready to redeem their BTC, they simply send zenBTC back to the protocol, which burns the token and releases the underlying Bitcoin. This mint-and-redeem process allows BTC to circulate within DeFi protocols while remaining easily accessible for redemption.

zenBTC is designed to address the limitations of existing wrapped Bitcoin products through three core features: automatic BTC-based yield, decentralized security via the dMPC network, and multi-chain functionality. Automatic, native yield generation ensures that zenBTC holders benefit from BTC returns without requiring complex strategies or active management. The decentralized security provided by dMPC distributes custody management, removing the need for reliance on centralized entities. Additionally, multichain compatibility gives zenBTC users access to high-speed, low-fee ecosystems, allowing BTC to move and be used seamlessly across various blockchains.

Earning yield on Bitcoin has traditionally been a complicated process requiring specialized knowledge and significant time commitment, which can discourage long-term BTC holders and traders who could benefit from passive income. zenBTC simplifies this by providing built-in, BTC-denominated yield, making it accessible to a broader audience, including users who have yet to engage actively in DeFi. The yield comes from aggregated staking rewards, which are converted back into BTC using THORChain and added to the protocol’s BTC collateral pool, ensuring users earn directly in sats. This approach leverages staking yield by deploying a tokenized representation of users’ Bitcoin as security collateral via EigenLayer. While users’ BTC remains securely locked on the Bitcoin blockchain, their zenBTC helps secure other networks in exchange for rewards. Additionally, by integrating with Solana, zenBTC brings Bitcoin liquidity to an ecosystem known for its speed and efficiency, which is often lacking in traditional BTC DeFi solutions.

zenBTC’s target market encompasses two substantial DeFi sectors: wrapped Bitcoin products, with a total value locked (TVL) of over $17B, and liquid restaking tokens, which command an $15.96B TVL, as of mid-December 2024 (DeFi Llama). The combined $32+ billion market highlights the vast potential for a wrapped Bitcoin solution that supports yield and offers multichain access. The integration with Solana further positions zenBTC to attract users within this expanding ecosystem, where BTC liquidity has previously been limited.

zenBTC aims to target a more diverse set of users than other wrapped Bitcoin products, including DeFi traders leveraging BTC as on-chain collateral, institutional investors seeking yield-bearing Bitcoin exposure, exchanges facilitating BTC transactions, long-term BTC holders, and developers building DeFi applications in need of interoperable assets. The addition of Solana support opens new possibilities for these users, particularly those drawn to the efficiency of Solana’s blockchain. By providing secure, yield-bearing BTC compatible with multiple chains, zenBTC is set to meet a variety of user needs and drive broader adoption of BTC within DeFi.

Conclusion

Zenrock’s innovative distributed MPC (dMPC) technology positions it as a critical enabler in addressing the pressing challenges of blockchain interoperability, security, and liquidity fragmentation. By providing a trust-minimized, decentralized approach to key management, Zenrock eliminates the vulnerabilities associated with centralized and semi-centralized solutions, which have been repeatedly exploited in high-profile hacks. Its architecture, underpinned by zrChain and zrSign, delivers secure, scalable, and chain-agnostic solutions that redefine the standards for cross-chain communication.

zenBTC exemplifies the transformative potential of Zenrock’s technology. By combining decentralized custody, native BTC yield, and multichain compatibility, zenBTC offers a compelling alternative to existing wrapped Bitcoin products. It simplifies yield generation for long-term Bitcoin holders, enhances liquidity across high-performance blockchains like Solana, and unlocks new use cases for DeFi traders and institutional investors alike.

With the growing demand for secure, interoperable blockchain solutions, Zenrock is uniquely positioned to drive innovation in cross-chain applications. Its ability to seamlessly integrate with multiple blockchain ecosystems, while maintaining decentralized security, establishes it as a cornerstone of the evolving multichain economy. As the blockchain space continues to mature, Zenrock’s solutions are poised to capture significant market value and unlock new possibilities for decentralized finance.

Beyond financial applications, Zenrock’s dMPC technology is also emerging as a key enabler for AI-driven autonomous agents, providing them with permissionless access to secure key management. As AI agents evolve beyond chatbots and require the ability to control assets, deploy smart contracts, and transact across multiple chains, traditional custody solutions become impractical. Centralized key management is incompatible with autonomous agents, and multi-sigs introduce unnecessary complexity. By leveraging zrSign and zrChain, Zenrock ensures that AI agents can securely interact with blockchain ecosystems in a decentralized, trust-minimized manner, unlocking a new frontier for on-chain automation.