The problem Ember Protocol solves

Ember Protocol: Unlocking Native Bitcoin Liquidity Across Chains

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
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
Chainlink Integration: CCIP
Description: Handles loan repayments and updates loan states. Uses CCIP to accept repayments from any supported chain.

---

EmberLiquidityPool.sol
View
Chainlink Integration: CCIP
Description: Manages stablecoin liquidity. Uses CCIP to transfer funds cross-chain to users.

EmberLiquidityToken.sol
View
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
• Whitepaper: Ember Protocol Whitepaper (Google Docs)
• GitBook: https://ember-7.gitbook.io/ember-protocol

---

Challenges I 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

---

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.