OXO Protocol
Bitcoin's DeFi Layer
From digital gold to a living, breathing financial ecosystem — OXO brings Bitcoin into everyday use without changing Bitcoin.
Abstract
Bitcoin holds over $1 trillion in value yet participates in almost none of the decentralized finance ecosystem. The dominant narrative — "digital gold" — has kept BTC inert while every other major asset has found productive use on-chain.
OXO Protocol is a Layer-1.5 infrastructure built on Ethereum that bridges Bitcoin into a complete DeFi and payments ecosystem. Users deposit BTC and receive oxoBTC, a 1:1 backed on-chain representation that can be swapped, lent, staked, used across chains, or spent via NFC-enabled apps — all while remaining redeemable for real BTC at any time through the OXO bridge.
The protocol is live on Sepolia testnet with all core modules deployed and auditable. Mainnet launch will follow a competitive public security audit. No arbitrary deadline — security first.
The Bitcoin Problem
Digital Gold, Frozen in Place
Bitcoin was designed to be peer-to-peer electronic cash. In practice, the vast majority of BTC sits idle in wallets — appreciated in value but generating no yield, participating in no protocol, and spending no fees back into any ecosystem. The Lightning Network addressed micropayments but did not solve DeFi participation.
Existing Solutions Fall Short
| Protocol | Model | Problem |
|---|---|---|
| WBTC | Custodial (BitGo) | KYC required, centralized custody, no native DeFi |
| tBTC | Threshold signatures | 6-hour mint delay, complex UX, limited integrations |
| cbBTC | Coinbase custodial | Requires Coinbase account, US-centric |
| OXO oxoBTC | Relayer + multisig | ~10 min mint, permissionless, full DeFi stack |
The Missing Layer
Ethereum has its DeFi layer. Solana has its DeFi layer. Bitcoin — the largest crypto asset by market cap — has no native, fully integrated DeFi and payments layer. OXO is built to be exactly that.
The OXO Solution
The Ecosystem Loop
Once a user bridges BTC into OXO Protocol, they enter a self-contained financial ecosystem. They can stay entirely within OXO, move to other EVM chains via cross-chain bridges, and always return to BTC through the OXO exit bridge. The protocol is designed so that OXO is always the entry and exit point for Bitcoin liquidity.
Key Design Principles
- Non-custodial by design. Users hold oxoBTC directly. The bridge custodial layer is secured by a 3-of-5 multisig in Phase 1, transitioning to Threshold Signature Scheme (TSS) in Phase 2.
- OXO as the exit gate. Cross-chain transfers of oxoBTC are supported, but conversion back to real BTC is always performed through the OXO bridge. This creates durable protocol demand regardless of where users take their oxoBTC.
- Yield on Bitcoin. By depositing oxoBTC into the staking contract, users earn OXO emissions and protocol fee revenue — generating yield on an otherwise idle asset.
Protocol Architecture
oxoBTC Token
oxoBTC is an ERC-20 token with 8 decimal places (matching Bitcoin's satoshi precision).
Every unit of oxoBTC in circulation is backed 1:1 by BTC held in the bridge custody.
The token is minted exclusively by BridgeV3 upon verified deposit and burned upon redemption.
BridgeV3
The bridge operates as a relayer-signed mint system. When a user sends BTC to the protocol deposit address, an off-chain relayer detects the confirmed transaction, signs a mint digest using ECDSA, and submits it to the mintAndTransfer() function. Replay attacks are prevented via unique deposit IDs stored on-chain.
A 0.1% bridge fee is charged on every mint and routed to the Protocol Treasury, which distributes it to stakers (70%), POL (20%), reserve (5%), and OXO buyback-burn (5%).
ZK Rollup
The OXO ZK Rollup is a Groth16-based validity rollup built with Circom circuits. Phase 1 supports 256 transactions per batch with 8-account state management. Increasing batch size from 256 to 1,024+ transactions requires only a circuit recompile and a new trusted setup ceremony — not a protocol migration.
| Parameter | Phase 1 (live) | Phase 2 (roadmap) |
|---|---|---|
| Tx per batch | 256 | 1,024+ |
| Account state | 8 accounts | Unbounded (Merkle tree) |
| Proof system | Groth16 | PLONK / Halo2 |
| Sequencer | Centralized (low cost) | Decentralized (DAO) |
| Finality | ~1 Ethereum block | ~1 Ethereum block |
| Circuit upgrade | Recompile only | — |
Core Modules
Protocol Fee Flow
Tokenomics
Architecture & Value Capture
The exact supply, emission schedules, and distribution percentages are currently undergoing rigorous optimization and will be published closer to the Mainnet Genesis event. OXO Protocol is committed to a community-first distribution model.
Dual-Token Ecosystem
| Token | Role | Supply | Decimals |
|---|---|---|---|
| oxoBTC | The core liquid asset. 1:1 fully backed, redeemable, non-yield-bearing by itself but highly composable across DeFi. | Dynamic (mint/burn) | 8 |
| OXO Token | The native protocol asset. Designed for value capture, governance, and fee utility. | Fixed — revealed at TGE | 18 |
OXO Value Drivers
OXO Utility
| Action | Benefit |
|---|---|
| Stake OXO | Earn a share of protocol fee revenue (ETH + oxoBTC) |
| Hold OXO | Lending LTV boost — borrow more against your oxoBTC |
| Stake OXO (large) | Zero bridge fee — free BTC entry and exit |
| OXO Governance | Vote on protocol parameters, fee rates, and treasury allocation |
Security Model
Bridge Custody
Phase 1 (current): 3-of-5 multisig relayer. Five independent key holders must co-sign any mint operation. No single point of failure.
Phase 2 (roadmap): Transition to Threshold Signature Scheme (TSS) — a cryptographic protocol where the private key is never assembled in one place. This eliminates custodial risk while maintaining operational speed.
Smart Contract Security
All core contracts use OpenZeppelin v5 audited libraries. Specific protections include:
| Risk | Mitigation |
|---|---|
| Replay attacks (bridge) | On-chain deposit ID mapping (usedDigests) |
| Reentrancy | ReentrancyGuard on all fund-moving functions |
| Oracle manipulation | Chainlink feeds with 1-hour staleness check |
| Unauthorized mint | Role-based access (MINTER_ROLE + ECDSA signature) |
| Undercollateralized borrow | Health factor check on every borrow and withdraw |
| Admin key risk | Multisig admin (roadmap: DAO timelock) |
Liquidity Bootstrapping
OXO Protocol addresses the cold-start problem through a phased, protocol-owned liquidity (POL) strategy rather than relying solely on external LPs.
| Pool | Phase | Source |
|---|---|---|
| oxoBTC / ETH | Launch | Treasury POL + protocol allocation |
| oxoBTC / USDT | Phase 2 | Treasury POL + LP incentives |
| OXO / ETH | Launch | Liquidity allocation (% of supply) |
| OXO / oxoBTC | Phase 2 | Staking rewards flywheel |
addPOL() are held permanently in the Treasury contract. This provides a price floor and guarantees that the DEX remains functional regardless of external LP behavior.
Audit Plan
Pre-mainnet, OXO Protocol will run a competitive audit contest on Code4rena with a minimum $15,000 reward pool. All findings will be publicly disclosed and resolved before launch.
Roadmap
The Path to L1.5
OXO Protocol development follows a strict milestone-driven approach, prioritizing security and architectural robustness over arbitrary deadlines.
Deployed Contracts (Sepolia Testnet)
| Contract | Address |
|---|---|
| oxoBTC Token | 0xA6fB891D117ce6C03880168bADE140067ED44D78 |
| OXO Token | 0xca0cd5448fabdfdc33f0795c871901c5e2bb60a8 |
| BridgeV3 | 0xF89105BD4e016Dcc88bca896d43a4aD3C64c6083 |
| OXO Swap Factory | 0xe969090d30f76e8b7969db2113d7572b5944e842 |
| OXO Swap Router | 0xb898537873ab341557963db261563092c784e725 |
| OXO Lending | 0xd8f802BBeD0DB111f917C318caC196452da8DBb5 |
| OXO Staking | 0x54e8f0348EB1E531f72d94E89FF877bA6B9b460A |
| Protocol Treasury | 0x9aB88742B75Cc82732df2648406cC52C9901985D |
| Flash Exit | 0x7aD326031a056e87d78178F8e08Fb998Cb8131F1 |
| OXO Rollup | 0xb76f2de1fC31A374986B7622a4d89f6CBB3b89c9 |
| ZK Verifier | 0x9111fecE6167b1c12f84627D90A7E40aF07319FF |
Ready to be early?
Join the waitlist. Be among the first to access OXO when we launch.