Ember Protocol
Self-custodial Bitcoin Backed Loans
Demo
About
The problem it solves ## [Ember Protocol: Unlocking Native Bitcoin Liquidity Across Chains](https://docs.google.com/document/d/16GOyJAM7Cw_Rw4h6ou0IFiRnnc7SkBgF2zpuuaixwF0/edit?usp=sharing) **Ember Protocol** solves the problem of unlocking liquidity from ***Bitcoin***—trustlessly and across multiple chains—without relying on custodians, bridges, or wrapped tokens. Traditionally, Bitcoin-backed loans have been limited because Bitcoin isn’t programmable like smart contract blockchains. Solutions like wrapped Bitcoin (e.g. wBTC) force users to trust custodians, introducing centralization and counterparty risk. Even decentralized wrapped Bitcoin solutions tie users to specific chains, restricting flexibility and increasing bridging risks and costs. --- #### Ember’s Trustless, Cross-Chain Solution **Ember** changes everything. It allows users to **borrow stablecoins on any chain**—like Ethereum, Avalanche, and others—while keeping their **native Bitcoin securely locked on Bitcoin Layer 1**. --- #### What You Can Do with Ember Protocol **Borrow Stablecoins Without Selling Bitcoin** Users can unlock value from their BTC while still holding their asset for potential future gains. **Remain Fully Self-Custodial and Trustless** Ember leverages **atomic swaps** and **Bitcoin Discreet Log Contracts (DLCs)**, ensuring transactions are all-or-nothing. Even if operators collude, they cannot steal user collateral thanks to cryptographic guarantees. **Access Cross-Chain Liquidity** Using **Chainlink CCIP**, Ember lets users borrow stablecoins on any supported blockchain while liquidity remains consolidated on Ethereum L1—eliminating bridging risks and simplifying the user experience. **Lend Stablecoins Safely** Lenders can provide USDC or other tokens to earn predictable yields: * No slashing risks (unlike staking) * No impermanent loss (unlike AMMs) * Their positions are represented by **liquid tokens that accrue value over time** --- #### Trustless Security and Automation Powered by Chainlink **Chainlink VRF:** Tamper-Proof Operator Selection Chainlink VRF (Verifiable Random Function) selects random operators daily to act as aggregators—ensuring fair, unpredictable participation. **Chainlink Automation:** No Manual Interventions Chainlink Automation triggers tasks like loan monitoring and aggregator rotation—keeping the system running smoothly 24/7.  **Chainlink CCIP**: Secure Cross-Chain Transfers Chainlink CCIP enables secure messaging and token movement across chains, letting users borrow on any chain while their BTC stays on L1. **Chainlink Price Feeds**: Accurate & Tamper-Proof Real-time **BTC/USD price feeds** protect the protocol from manipulation and ensure liquidations are justified.  --- #### Economic Security: ETH-Staked Operators Operators stake ETH into the protocol using the EigenLayer integration and **can be slashed** if they misbehave. This ensures: * Honest behavior through economic disincentives * The **total ETH staked always exceeds** the lending pool size * Lenders and borrowers are protected even in worst-case scenarios --- #### Smart Contracts Overview **EmberLoanManager.sol** **[View](https://github.com/mber-labs/ember-contracts/blob/main/src/EmberLoanManager.sol)** **Chainlink Integration:** VRF, CCIP, Automation, Price Feeds **Description:** Manages Bitcoin-backed loans, including issuance and liquidation. VRF selects random aggregators, CCIP sends stablecoins to the user's preferred chain, Price Feeds determine BTC/USD value, and Automation triggers hourly LTV checks for liquidations. --- **LoanRepayment.sol** **[View](https://github.com/mber-labs/ember-contracts/blob/main/src/LoanRepayment.sol)** **Chainlink Integration:** CCIP **Description:** Handles loan repayments and updates loan states. Uses CCIP to accept repayments from any supported chain. --- **EmberLiquidityPool.sol** **[View](https://github.com/mber-labs/ember-contracts/blob/main/src/EmberLiquidityPool.sol)** **Chainlink Integration:** CCIP **Description:** Manages stablecoin liquidity. Uses CCIP to transfer funds cross-chain to users. --- **EmberLiquidityToken.sol** **[View](https://github.com/mber-labs/ember-contracts/blob/main/src/EmberLiquidityToken.sol)** **Description:** ERC-20 token representing a lender’s share in the pool. Accrues yield and supports DeFi composability. --- **Project Resources** * **Live App:** [https://ember-frontend-alpha.vercel.app](https://ember-frontend-alpha.vercel.app) * **Whitepaper:** [Ember Protocol Whitepaper (Google Docs)](https://docs.google.com/document/d/16GOyJAM7Cw_Rw4h6ou0IFiRnnc7SkBgF2zpuuaixwF0/edit?usp=sharing) * **GitBook:** [https://ember-7.gitbook.io/ember-protocol](https://ember-7.gitbook.io/ember-protocol) ---
How it's made
Challenges we ran into ### Major Technical Challenges A major challenge was working with **Discreet Log Contracts (DLCs)** on Bitcoin. Since Bitcoin isn’t built for complex smart contracts, designing logic to lock BTC as collateral and release it only under precise conditions was extremely difficult. We had to dive deep into cryptographic signatures, transaction structures, and atomic swap workflows to make **DLCs** fit seamlessly into our protocol.  Another big hurdle was integrating **Chainlink CCIP**. Enabling secure cross-chain communication so users could borrow stablecoins on other chains while keeping Bitcoin collateralized on L1 required careful handling of **CCIP**’s messaging and token transfer mechanisms. Making this work smoothly alongside Bitcoin’s limitations was a complex puzzle.  Despite these challenges, **we did it.** We successfully built a system that connects native Bitcoin collateral to cross-chain stablecoin loans in a decentralized, trustless way. --- ### Deployed Contracts (Avalanche Fuji Testnet) * **EmberLoanManager.sol** `0x3D926Bc8fd69F6FD9173Cd5ECf179D4787c6DB6D` * **EmberLiquidityToken.sol** `0xEd1FecE2B5A88cA3eC1F60F263E17d30f981aae0` * **EmberLiquidityPool.sol** `0x09072C4132163258e703245eD7813a81e5400f3B` * **LoanRepayment.sol** `0xc6E6B17E1d96BE50a055818eF641de4E349E9961` --- ### Example CCIP Transaction [View on Snowtrace](https://testnet.snowtrace.io/tx/0xfe307467b7d692e4f4ae83b4ca4cd6812c46197a039da4f5f4c3cccbf408031c) --- ### Future Plan Ember Protocol is just getting started. Our roadmap focuses on expanding functionality, improving user experience, and deepening decentralization: * **Mainnet Deployment** Launch Ember Protocol on mainnet with full CCIP integration for cross-chain borrowing and repayment. * **Audits and Security Enhancements** Undergo third-party smart contract audits to ensure the protocol is secure, resilient, and production-ready. * **Governance and Token Launch** Launch the Ember governance token to progressively decentralize protocol upgrades, fee settings, and aggregator selection policies. --- ### Team Members * Raehat Singh Nanda * Surbhit Agrawal --- ### Summary: The Future of Bitcoin-Backed Lending Ember Protocol makes **Bitcoin-backed borrowing and lending**: * Decentralized * Trustless * Cross-chain compatible It replaces centralized, risky systems with a cryptographically secure, self-custodial solution—combining Bitcoin’s security with the smart contract power of other chains.