Basic Architecture Overview

1. BTC L1 → Chakra Network Interaction

Currently settlement between Chakra Network’s settlement layer and BTC L1 is done through L1 settlement primitives. L1 Settlement primitives execute actual BTC L1 transactions. Activities carried out by settlement primitives will be mapped as settlement artifacts, on Chakra Network’s shared settlement layer

Current L1 settlement primitives available are:

Name Info
Cobo Multi-Sig
Babylon (Babylon chain)
Others (would love to add Lombard’s primitives here so that stakers can pick Lombard’s solution too, in further future )

<aside> 💡 [Possible collab point] We can support Lombard’s BTC L1 interaction primitives so that users/stakers can pick Lombard’s custodial solutions, while being eligible for Lombard yield in some form

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2. Chakra Network VM Layer - Sharing & Recomposing Liquidity

Step1: BTC L1 assets get mapped as settlement artifacts

Native BTC deposited into Chakra Network will be denominated as TLBTC-xxx

<aside> 💡 While settlement artifacts are implemented as ERC-20 due to Chakra Network’s vm being EVM, they are treated as data for settlement and not assets

</aside>

<aside> 💡 Any settlement artifacts on the Chakra Network shared settlement layer will never be minted as assets directly on execution layers by the Chakra Network team directly. DeFi teams have the ownership and sovereignty over minting financial assets on execution layers as they fit based on Chakra Network settlement artifacts (See section below for how minting assets actually work)

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nativeBTC-cobo
nativeBTC-ceffu (coming soon)
tlBTC-cobo These represent Babylon-staked time-locked BTC that will release towards Cobo during maturation
tlBTC-ceffu (coming soon) These represent Babylon-staked time-locked BTC that will release towards Cobo during maturation
tlBTC-lombard-x (possible)

Step2: Minting assets from settlement artifacts

Any free and not currently used settlement artifacts can be use to mint assets

<aside> 💡 Settlement artifacts cannot be used as staking collateral for two different types of assets at the same time by default. This is to prevent 1 BTC giving birth to n amounts of xxBTC,

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Misc: Settlement Artifact Recomposition Through Chakra Network’s VM layer

We also offer devs the capability to recompose their settlement artifacts in a

Example: By exchanging nativeBTC-cobo for nativeBTC-ceffu

Example: By exchanging nativeBTC-cobo for tlBTC-cobo, devs can increase yield, with some increased risk. Chakra Network handles the operation where native BTC stored in a Cobo wallet is staked into Babylon automatically, devs do not need to write any additional code for this to happen, other than making an exchange