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Native BTC Collateral → Stellar USDC

Leveraging NEAR Chain Abstraction & Stellar–NEAR Intents Integration

We outline the planned architecture for enabling native Bitcoin (BTC) to be used as collateral for borrowing USDC on Stellar within OctoLend.
The design extends OctoLend's lending markets to include BTC as colalteral.

This mechanism is based on NEAR’s chain-abstraction stack, including:

Once implemented for BTC, the same architecture can be extended to other native L1 collateral (e.g., XRP, LTC).

Overview​

OctoLend plans to support a new collateral flow where:

  • BTC stays on Bitcoin L1
    Deposited into an MPC-controlled vault via NEAR Chain Signatures.

  • NEAR validates the collateral lock
    The NEAR Collateral Manager records the locked BTC and emits cross-chain proof data.

  • Stellar receives the proof
    A lightweight NEAR→Stellar relay forwards verified state commitments.

  • Soroban mints a BTC-backed collateral token
    A Soroban External Collateral Module (ECM) mints xcBTC (an SAC token) reflecting the BTC locked on Bitcoin.

  • OctoLend accepts xcBTC as native collateral
    Users borrow USDC on Stellar, priced via BTC/USD oracles.

  • USDC delivery remains on Stellar
    (Stellar's integrated NEAR Intents can route USDC to any chain the borrower specifies.)

This approach maintains native chain security for BTC while enabling OctoLend's execution for lending and liquidation logic on Stellar.

Planned Flow​

Native_BTC_Collateral.png

1. User Deposits BTC to MPC Vault​

  • OctoLend requests a BTC deposit address from NEAR.
  • Address is derived from NEAR Chain Signatures, representing a decentralised MPC signer group.
  • User sends BTC to this address on bitcoin.

2. NEAR Confirms BTC Lock​

  • A watcher/relayer monitors Bitcoin L1.
  • When N confirmations are met, it calls NEAR's Collateral Manager:
    • Records the BTC amount.
    • Emits a proof (state commitment) for downstream verification.

3. Proof Relayed to Stellar​

  • A simple NEAR→Stellar relay forwards:
    • vault_id
    • amount_satoshis
    • proof_hash

4. Soroban ECM Mints xcBTC​

  • External Collateral Module verifies the NEAR proof.
  • Mints xcBTC SAC tokens to the user’s Stellar wallet.
  • xcBTC behaves like any other collateral token inside OctoLend.

5. User Borrows USDC on Stellar​

  • User deposits xcBTC into OctoLend.
  • OctoLend:
    • Prices BTC using oracles,
    • Applies LTV rules,
    • Issues USDC on Stellar.

6. Repay or Liquidate​

  • Repay:

    • User burns xcBTC,
    • ECM requests NEAR to unlock BTC to a Bitcoin address.

  • Liquidation:

    • OctoLend seizes xcBTC,
    • ECM instructs NEAR to liquidate or transfer BTC on Bitcoin via Chain Signatures.