Bridge Specific Architecture

The Insaanity ecosystem consists of several key components that work together to provide a seamless and secure experience for users:

1. Insaanity Custodians: These entities, selected from a pool of Eigen layer nodes running the Insaanity client, securely hold the Bitcoin reserves that back the Insaanity Tokens (BTC.i). They contribute collateral in the form of Ether (ETH) to ensure the stability and integrity of the network.

2. Insaanity Depositors: These are users who choose to lock their Bitcoin and receive the equivalent BTC.i tokens on the Ethereum blockchain. Depositors send their Bitcoin to the Insaanity threshold wallet, which securely stores and manages the reserves using threshold mechanisms.

3. Insaanity Redemption and Minting: Users can convert BTC.i tokens to Bitcoin by requesting a redemption process. By burning their BTC.i tokens on the Ethereum network, users prompt the threshold set of Custodians to release the equivalent amount of Bitcoin. Similarly, when users want to convert Bitcoin to BTC.i tokens, they can initiate a minting process by sending their Bitcoin to the threshold wallet, which issues the corresponding BTC.i tokens on the Ethereum network.

4. Insaanity Oracle Network: An Insane Oracle Network is utilized to determine the exchange rate between Insane Tokens and Bitcoin. This decentralized network collects and verifies real-time pricing data and other relevant information, ensuring accurate and up-to-date conversion rates.

5. Ethereum Smart Contracts: Smart contracts deployed on the Ethereum blockchain govern the interaction and coordination between participants in the Insaanity ecosystem. These contracts handle tokenization, redemption, collateralization, and dispute resolution processes, maintaining the integrity and trustlessness of the system.

Flow for the Insaanity bridge operation:

1. Depositing BTC: Users begin by depositing their BTC into the Insaanity bridge to obtain BTC.i tokens. The deposited BTC is securely held in a threshold wallet managed by a decentralized group of signers. Insaanity utilizes a (t,N) threshold wallet, where t out of N signers can initiate transactions.

2. Selection of Wallet Owners: To generate verifiable randomness in a decentralized manner, specialized Threshold Relays are employed. These relays leverage a group of participants to collectively contribute to the generation of a random value, ensuring that no single participant has full control or knowledge of the generated randomness.

3. Minting BTC.i: Once the BTC deposit is confirmed, the Insaanity protocol mints an equivalent amount of BTC.i tokens on the Ethereum blockchain. Each BTC.i token represents the same value as the BTC deposited in the bridge.

4. Using BTC.i: Users can utilize the minted BTC.i tokens on the Ethereum network like any other ERC-20 token. They can trade, provide them as collateral in DeFi protocols, or interact with dApps and services that accept BTC.i.

5. Redemption: When users want to redeem their BTC, they initiate a redemption process by burning their BTC.i tokens. The protocol triggers an auction mechanism to find a keeper who will purchase the burnt BTC.i tokens using BTC. Once the BTC.i tokens are burned, the corresponding amount of BTC is released to the user's specified BTC address.

By following this improved flow, users can securely deposit BTC, obtain equivalent BTC.i tokens, utilize them on the Ethereum network, and easily redeem their BTC when desired. The use of threshold wallets, decentralized randomness generation, and smart contracts ensures the integrity and trustworthiness of the Insaanity ecosystem.