The interoperability protocol focused on Bitcoin, Portal to Bitcoin, has successfully secured $25 million in funding with the introduction of its atomic over-the-counter (OTC) trading desk.
As announced on Thursday to Cointelegraph, the fundraising was led by digital asset lender JTSA Global, following previous investments from Coinbase Ventures, OKX Ventures, Arrington Capital, and others.
Alongside the funding, the company has launched its Atomic OTC desk, promising “instant, trustless cross-chain settlement of large block trades.” This new service resembles cross-chain atomic swaps offered by platforms like THORChain, Chainflip, and other Bitcoin-centric systems like Liquality and Boltz.
What distinguishes Portal to Bitcoin is its concentrated effort on the Bitcoin (BTC)-anchored cross-chain OTC market, targeting institutions and large investors, supported by its unique tech stack. “Portal provides the infrastructure to establish Bitcoin as the settlement layer for global asset markets, without the need for bridges, custodians, or wrapped assets,” stated Chandra Duggirala, founder and CEO of Portal.
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Native assets only, without custody
Portal to Bitcoin utilizes Hashed Timelock Contracts (HTLCs) across various chains and Bitcoin Taproot contracts to facilitate the exchange of native BTC for native assets on integrated blockchains in a non-custodial format, emphasizing reduced trust assumptions. HTLCs ensure that either both parties complete the exchange or both recover their assets.
The technology employs BitScaler, a layer-3 framework similar to the Lightning Network, built atop Bitcoin using Taproot and policy templates. It establishes channels akin to Lightning channels, featuring a hub-and-spoke model with a validator federation acting as the hub and liquidity providers functioning as spokes. Trades within these channels are secured by HTLCs.
This design allows end-users to avoid reliance on wrapped tokens managed by federations, engaging solely with native assets on their respective chains. Additionally, the structure ensures that if the process halts mid-swap and HTLCs expire, funds can be reclaimed.
Duggirala mentioned to Cointelegraph that while atomic swaps exist, solutions like THORChain and Chainflip involve custodial vaults managed by validators. In contrast, Portal to Bitcoin does not expose users to risks where “a majority of deceitful validators could potentially abscond with all the vault-controlled funds.
Although Liquality and Boltz have similarities with Portal to Bitcoin in their HTLC-centric design, they primarily serve as single-swap tools rather than providing a comprehensive liquidity layer and DeFi ecosystem built on Bitcoin with pooled liquidity, thus differing significantly in scope.
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The security assumptions
PortalOS features a Notary Chain built on the Ethereum Virtual Machine on Cosmos (EVMOS), supported by validators known as Portal Guardians. This network starts with 42 validator slots (recently increased to 150 according to Duggirala), with intentions to maintain at least 21 as a minimum. Validator selection is permissionless through a PBT staking auction, although Duggirala indicated that currently, the validator group is permissioned, with plans for permissioned auctions down the line:
“We intentionally kept the initial validator set to known entities and more concentrated for the simple reason of node software management.”
The documentation clarifies that this limited validator count is intentional and should not be seen as a problem, since they do not manage any vaults or liquidity pools.
However, according to the documentation, validators oversee the Lightning hub, maintaining the notary chain state, managing pricing, liquidity pool accounting, trade matching, and cross-chain contracts for the protocol’s token. They are also expected to assist in operating an automated market maker (AMM) once the system progresses beyond its current order book model.
This indicates that while validators cannot directly seize or freeze users’ assets, they have the potential to censor or delay swaps, misprice markets, disrupt the AMM operations, or halt the system entirely if they act maliciously or become unavailable.
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