Nomic, a layer-1 bridging solution for, will enable Bitcoin liquidity on Cosmos via a Bitcoin-backed token.
The team will implement an upgrade, the nBTC Interchain Upgrade, to the Nomic layer-1 blockchain, by the end of October to kick off the launch of the new token.
The nBTC token will act as a native token in the Cosmos ecosystem and will be transferable through the Interchain Blockchain Communication (IBC) protocol.
After the upgrade, the Nomic app or Nomic-integrated Cosmos apps like Osmosis, a decentralized exchange, will facilitate the issuance and redemption of nBTC for Bitcoin.
The blockchain upgrade is scheduled for October 27 with activation expected by October 30.
Nomic’s founding and developing team, Turbofish’s CEO Matt Bell unveiled the project at the Cosmoverse conference in Turkey today.
Bell said, “Nomic will now unlock the exciting DeFi capabilities of the Cosmos ecosystem for any user holding BTC.”
The development can help solve the liquidity problem of the Cosmos ecosystem, which is in “need of a base money asset that can serve as its primary store of value,” said Sunny Aggarwal, co-founder of Osmosis.
“Nomic will help make this long-awaited union for a Bitcoin-centric Cosmos a reality,” Aggarwal added.
Concerns about cross-chain bridges
According to DeFiLlama data, the total value lost in hacks from cross-chain bridges accounts for 37% of the cumulative amount of crypto hacks since 2016, raising concern about bridging protocols.
However, Bell told Decrypt that Nomic is “fully decentralized and non-custodial, making it the first Bitcoin bridge of its kind.”
Bell added that Bitcoin BTC is not “locked” on Nomic like other bridging protocols. Instead, it is “held in a “reserve output’ on the Bitcoin blockchain” and funds are released when transactions are signed by Nomic validators.
This feature enables “Emergency Disbursals” which reduces the risk of losing Bitcoin should Nomic face any issues.
Besides Bitcoin, blockchain teams such as Noble and Celesta are also working to launch native USDC in the Cosmos ecosystem to enhance its DeFi liquidity.