Bitcoin-native interoperability protocol Portal to Bitcoin has announced a significant funding round of $25 million, coinciding with the launch of its new atomic over-the-counter (OTC) trading desk. This development aims to facilitate instant, trustless cross-chain settlement for large block trades.
The funding round was led by digital asset lender JTSA Global, with participation from previous investors including Coinbase Ventures, OKX Ventures, and Arrington Capital. This influx of capital supports the company's expansion and the rollout of its innovative trading service.
The newly launched Atomic OTC desk offers a solution for "instant, trustless cross-chain settlement of large block trades." This functionality draws parallels to atomic swaps already offered by platforms like THORChain and Chainflip, as well as Bitcoin-focused systems such as Liquality and Boltz.
Portal to Bitcoin differentiates itself by focusing on the Bitcoin (BTC)-anchored crosschain OTC market specifically for institutions and large investors, referred to as whales. Its technology stack is designed to establish Bitcoin as the settlement layer for global asset markets without the need for bridges, custodians, or wrapped assets. Chandra Duggirala, founder and CEO of Portal, explained, "Portal provides the infrastructure to make Bitcoin the settlement layer for global asset markets, without bridges, custodians, or wrapped assets."
Seamless Trading with Native Assets and Non-Custodial Approach
Portal to Bitcoin utilizes Hashed Timelock Contracts (HTLCs) across multiple chains, alongside Bitcoin Taproot contracts, to enable the swapping of native BTC for native assets on integrated blockchains. This process is conducted in a non-custodial manner, significantly reducing trust assumptions. HTLCs are a critical component, ensuring that either both parties complete the exchange or both parties recover their original assets, thereby preventing loss.
The protocol leverages BitScaler, a layer-3 solution that functions similarly to the Lightning Network but is built on top of Bitcoin using Taproot and policy templates. It establishes channels akin to Lightning channels, creating a hub-and-spoke structure. In this model, a validator federation acts as the hub, and liquidity providers serve as the spokes. Trades within these channels are secured by HTLCs.
For end-users, this architecture means they can engage with native assets on their native chains without needing to trust wrapped tokens or federations. The system also provides a guarantee that if a swap is interrupted and HTLCs expire, the funds can be reclaimed by their owners.
Duggirala highlighted a key distinction from other atomic swap solutions: "While atomic swaps exist, THORChain and Chainflip are based on vaults taking custody of funds from both parties that are controlled by validators. Unlike with Portal to Bitcoin, with such setups, a majority of rogue validators can potentially steal all the vault-controlled funds."
He further elaborated on the differences with similar projects: "Liquality and Boltz are closer to Portal to Bitcoin in their HTLC-based design, but they are mostly simple, one-swap-at-a-time tools, not a whole liquidity layer and DeFi stack on top of Bitcoin with pooled liquidity. This makes the project scope quite different."
Understanding the Security Framework and Validator Roles
PortalOS features a Notary Chain built on the Ethereum Virtual Machine on Cosmos (EVMOS). This network is managed by entities known as Portal Guardians, which serve as validators. Initially, the network was designed with 42 validator slots, a number that has since been expanded to 150, with a minimum target of 21 validators required for operation. Validator selection is intended to be permissionless through a PBT staking auction. However, Duggirala clarified that the current validator set is permissioned, with permissionless auctions slated for future implementation, explaining: "We intentionally kept the initial validator set to known entities and more concentrated for the simple reason of node software management."
The documentation indicates that the intentionally limited number of validators is not a concern because they do not directly control any vaults or liquidity pools. Duggirala stated, "Validators’ only function in the DEX is to match a buyer and a seller, or one party with another. They do not control the flow of funds."
Validators’ only function in the DEX is to match a buyer and a seller, or one party with another. They do not control the flow of funds.
Despite this, the documentation also outlines that validators are responsible for controlling the Lightning hub and maintaining the notary chain state. This includes managing pricing, liquidity pool accounting, trade matching, and crosschain contracts for the protocol’s native token. Furthermore, they are expected to support the operation of an automated market maker (AMM) as the system transitions from its current order book model.
This means that while validators cannot directly seize or freeze user assets, they could potentially engage in censorship or delay swaps, manipulate market prices, disrupt the AMM's functionality, or even halt the entire system if they acted maliciously or became unavailable.