Zest Bets Bitcoin Can Back Loans Without Ever Leaving Its Own Chain

Zest Protocol has launched a capped mainnet demo of its Bitcoin Collateral Vaults, introducing a novel decentralized finance mechanism that allows Bitcoin (BTC) to back loans across EVM-compatible blockchains without leaving its native Layer 1 network. Currently, only approximately 0.8% of circulating Bitcoin is actively deployed in DeFi, primarily due to custodial risks associated with wrapped tokens like WBTC. By utilizing Bitcoin Taproot outputs and self-custodial vaults, Zest enables users to secure loans—such as drawing USDC on Ethereum—while maintaining sovereignty over their native BTC collateral. In its initial production rollout, settlements and contestations will be verified by a group of independent guardians before transitioning to trustless BitVM zero-knowledge proof verification. This setup allows for dynamic collateral management, including partial liquidations and native timelock asset recoveries if destination networks fail. By mitigating third-party custodian dependencies, this technology could unlock substantial idle Bitcoin capital, expanding BTC's utility across institutional and decentralized lending ecosystems without compromising base-layer security.