On July 22, Sui, a leading Layer-1 network, announced the launch of the Hashi Testnet in order to bring native Bitcoin collateral to its blockchain network. The launch will allow developers, institutions, and builders to test Bitcoin-based financial applications in a real-world setting before the mainnet goes live.
Hashi is Sui’s native system for using Bitcoin as collateral in a decentralized way. It allows users to lock actual Bitcoin on the Bitcoin network and use it as programmable collateral on Sui without traditional processes, such as wrapping, traditional bridging, or centralized custodians.
Bitcoin will stay secured on its blockchain network, while Sui’s smart contracts will handle functions like lending, borrowing, and credit origination.
Adeniyi Abiodun, Co-Founder and Chief Product Officer of Mysten Labs, the original contributor to Sui, stated in the blog post that “Every major asset class eventually develops deep credit, lending, and liquidity markets. Bitcoin is no different. Hashi is giving developers the infrastructure to build those markets onchain with the security, transparency, and programmability institutions have been waiting for.”
How Does Hashi Work?
The process of Hashi will take place on two different blockchain networks. To bring Bitcoin to Sui, users send native BTC to a unique 2-of-2 multisig deposit address linked to their Sui wallet. Validators running Hashi monitor the Bitcoin network, confirm the deposit after enough block confirmations, and mint a corresponding hBTC token on Sui. This hBTC can then be used as collateral in Sui DeFi applications for things like borrowing stablecoins.
To withdraw back to BTC, users will have to repay their loan on Sui and burn the hBTC. The system will then release the original native BTC to the specified BTC address by using secure multi-party computation signing. This two-sided flow keeps Bitcoin native and verifiable while unlocking its utility on Sui’s blockchain network.
Hashi is expected to resolve a major problem in the crypto sector. There is more than $1 trillion in BTC sitting idle as a store of value, with small use in DeFi due to limited programmability and trust issues. Traditional wrapped BTC solutions are known for counterparty risk, lack of transparency, or synthetic elements that institutions do not trust.
Hashi comes with a trust-minimized alternative with verifiable smart contracts, formal verification in Sui’s Move Language, and full on-chain transparency.
Hashi Testnet Adds Additional Layer of Security with Guardian Layer
A new feature in the Hashi testnet is the Guardian Layer, which is an additional layer of security. There will be secondary checks like guardian signatures along with MPC threshold signatures from validators before large collateral moves between chains. This mechanism will boost transparency on the blockchain network.
Apart from this, the protocol will focus on tax efficiency, with legal analysis from firms like Fenwick suggesting that deposits and redemptions may not trigger taxable events in certain jurisdictions like the U.S.
The blog post stated that, “Hashi testnet is the beginning of the ecosystem buildout that will ultimately power institutional Bitcoin lending, borrowing, and credit origination on Sui. From custody providers and wallet infrastructure to lending protocols and capital markets participants, builders can now begin validating integrations, testing operational workflows, and preparing production-ready applications before Hashi reaches mainnet.”
Hashi has raised support from more than 25 partners, including custodians, liquidity providers, DeFi protocols, wealth platforms, asset managers, and others. The list of partners includes BitGo, Ledger, Blockdaemon, Cobo, and Fordefi, Cumberland, FalconX, Bullish, Erebor Bank, AlphaLend, Scallop, Suilend, Navi, Fluid, SwissBorg, and others.
The pricing data will come from CF Benchmarks, while insurance will be provided by Soter Insure with Bitcoin-denominated coverage. Hashi testnet is also going through security audits through firms like Asymptotic, Certora, and OtterSec.
The launch comes after Hashi’s earlier devnet phase, and it could make Sui the leading blockchain network for Bitcoin Finance.
