CBTC
1. Background
1.1 What is CBTC?
CBTC is a 1:1 wrapped Bitcoin token by BitSafe, designed for secure bridging and trading on the Canton Network. Each CBTC is held by the minter or the holder in their Canton wallet and the reserve capital is held in a vault co-controlled by the Minter and a network of Attestor nodes, eliminating unilateral custody and traditional bridge attack surfaces.
1.2 Why Canton?
The CBTC–Canton integration advances institutional Bitcoin adoption by enabling scalable, privacy-preserving margin flows for structured products and derivatives. Canton has the following features:
Configurable on-chain privacy settings: Flows are visible only to the counterparties who need to see them
Built for lending, trading, settlements and yield opportunities
1.3 How to Use This Document
Concept first, code later—each chapter lays out the why and how, then links to READMEs and run‑books for hands‑on steps
Help & feedback—reach us via GSF Slack (#gsf-outreach) or email [email protected] with questions
2. System Overview
2.1 Architecture at a Glance
The CBTC system bridges the Bitcoin Layer‑1 UTXO model to Canton’s Daml‑based smart‑contract network. The system operates through a coordinated, decentralized process to ensure every Bitcoin deposit is securely verified before minting CBTC.
The bridge architecture consists of:
Bitcoin Layer – Bitcoin transactions are monitored and verified with required confirmations (currently 6)
Attestor Network – A decentralized network of Attestors monitor and manage Bitcoin deposit/withdrawal transactions, and translate those actions via a governance module on Canton to validate and execute actions
Canton Asset Layer – Daml contracts that mint and burn CBTC tokens, but only after a threshold of Attestor nodes contribute their Canton signatures to the contract execution. No CBTC can be minted or burned without this decentralized approval process.
2.2 Core Actors & Roles
Actor
Responsibilities
Coordinator
Executes periodic checks every 60-120 seconds, monitors deposit accounts, constructs Bitcoin transactions, and submits governance actions
Attestors
Independent nodes that verify deposits/withdrawals and submit confirmations via Canton's governance module. Every important action requires group approval
Minter
Create deposit accounts, send Bitcoin to generated addresses, initiate withdrawals, and hold CBTC tokens
2.3 Trust & Threat Model
The CBTC system relies on a decentralized network of Attestors who must coordinate via a governance module on Canton to validate and execute actions, and a group threshold signing process on the Bitcoin L1. Every important action requires group approval. This shared decision-making keeps CBTC decentralized, reliable, and secure.
Because Canton provides deterministic finality, once a mint or burn is executed its state transition is irrevocably committed, removing the roll‑back risk that probabilistic Layer‑1s face.
This ensures that no single party, including the Coordinator, can unilaterally mint CBTC or withdraw Bitcoin.
2.4 On-Ledger Governance Flow
The CBTC system relies on a decentralized network of Attestors who must coordinate via a governance module on Canton to validate and execute actions.
The governance process works as follows:
For actions like ConfirmDepositAction (for minting) or ArchiveWithdrawRequest (for withdrawal finalization), each Attestor must submit their confirmation signature independently
Each attestor member submits its signed confirmation message, and once a threshold of signatures has been reached on the contract, the Coordinator executes the action
2.5 Credentials & Permissioning in Canton
For CBTC there are two primary credentials:
Minter Credential — Grants the right to request deposit addresses and invoke the CBTC.Issuance mint choice
Holder Credential — Lets an institution receive, hold, transfer, and burn CBTC
3. User Flows
3.1 Mint Flow (Deposit BTC → Mint CBTC)
High‑Level Narrative
Minting converts BTC into CBTC on Canton in six coordinated steps.
From the user’s point of view the whole journey feels like a normal on‑chain deposit; the heavy lifting—vault creation, threshold signing, and contract issuance—happens behind the scenes.
Step‑by‑Step Walk‑through
Authentication — Users start by logging into their Canton account, establishing their on-chain identity for the deposit
Request deposit address — The system generates a unique Bitcoin address tied to the user's account. Power users can request multiple addresses for operational convenience, though a single address works for unlimited deposits.
Send Bitcoin — Users initiate a Bitcoin transaction to the provided address using any standard wallet—no special software or complex procedures required.
Automated monitoring — The bridge continuously scans the Bitcoin network for incoming transactions. Once your deposit reaches 6 confirmations (roughly 60 minutes), it enters the verification queue.
Decentralized verification — Multiple independent Attestor nodes review the confirmed transaction, each submitting their approval through Canton's governance system. This distributed verification prevents any single party from controlling the minting process.
CBTC issuance — When a threshold of Attestor approvals are gathered, the next periodic system check (every 60-120 seconds) triggers the minting of equivalent CBTC via the decentralized party model and the governance model.
Timing & Finality
The minting and withdrawal processes are automated, requiring no manual coordination.
3.2 Burn Flow (Redeem CBTC → BTC)
High‑Level Narrative
Redeeming CBTC reverses the bridging process, unlocking native Bitcoin that backs your CBTC token balance.
From your perspective, it works like any crypto withdrawal—specify an amount and destination, then wait for Bitcoin to arrive in your wallet. The system handles the coordination between burning your CBTC tokens and releasing the underlying Bitcoin through decentralized Attestor approval.
Step‑by‑Step Walk‑through
Authentication — Sign into your Canton account to initiate the withdrawal process
Set up withdrawal destinations — Configure one or multiple Bitcoin addresses where you want to receive funds—your hardware wallet, exchange account, or any Bitcoin address you control. These addresses are stored for future withdrawals, making repeat transactions one-click simple.
Submit withdrawal request — Select how much CBTC to redeem and choose your destination address. Your CBTC tokens are immediately burned on Canton, ensuring they can't be double-spent, while your withdrawal enters the processing queue.
Automated processing — The system detects your pending withdrawal and constructs a Bitcoin transaction to your specified address. Multiple Attestors independently review and approve the transaction through Canton's governance system to burn the CBTC on Canton once the required threshold is reached.<sup>[2]</sup>
Bitcoin delivery — Once Attestor approvals also reach the required threshold on the BTC L1, the fully-signed transaction is broadcast to the Bitcoin network. After standard confirmations (typically 6), your Bitcoin arrives at the destination address. <sup>[2]</sup>
Reliability & Safeguards
The withdrawal system includes multiple failure-resistant mechanisms:
Automatic retry logic — If a Bitcoin transaction fails to broadcast initially, the system automatically detects the failure during subsequent checks and rebroadcasts using stored transaction data
Idempotent operations — Each withdrawal generates a unique transaction ID that prevents accidental double-spending, even if network issues cause retry attempts
Distributed verification — No single Attestor can block or manipulate withdrawals; the threshold approval system ensures continued operation even with some nodes offline
4. Security Model
4.1 Canton Token Standard Compliance
CBTC uses the Canton registry utility and will adopt the universal token standard when viable
4.2 Distributed Infrastructure
CBTC's security foundation rests on a carefully selected network of institutional-grade operators. The system employs 9 pre-screened external node operators (including established providers like P2P and Everstake) alongside 1 BitSafe-operated node.
Each operator maintains over $1 billion in AUM (Assets Under Management), ensuring they have both the technical expertise and financial incentives to maintain system integrity. These operators run both Bitcoin and Canton nodes.
4.3 Cryptographic Address Generation
CBTC employs sophisticated cryptographic techniques to ensure each user receives a unique, secure Bitcoin deposit address. Each DepositAccount (DA) on Canton deterministically maps to a unique Bitcoin deposit address through a multi-step cryptographic process involving public key derivation and Taproot script construction.
Two-Stage Derivation Process:
Entropy Generation: The system starts with a fixed unspendable public key as the cryptographic foundation. Each DA's unique identifier undergoes SHA-256 hashing to generate entropy, which then serves as the chain code in the key derivation process. This creates a deterministic extended public key (xpub) that's unique to each deposit account.
Taproot Integration: The derived xpub combines with a fixed single-key script to construct a Taproot output with script-path spending enabled. This results in a valid P2TR (Pay-to-Taproot) Bitcoin address that's fully determined by the DA's identifier and can only be spent using the Attestors' group private key.
4.4 Transaction Validation Rules
The system employs strict UTXO selection criteria to prevent double-spending and ensure proper transaction ordering:
For Deposit Processing: A UTXO qualifies for minting only if it received 6 confirmations after the DepositAccount's recorded block_height, ensuring new deposits are processed in chronological order.
For Withdrawal Processing: A UTXO becomes eligible for spending only if it was confirmed with 6 confirmations before or at the DepositAccount's block_height, guaranteeing that only properly secured funds can be withdrawn.
This dual-criteria approach creates a clear separation between "available for withdrawal" and "pending deposit" funds, preventing race conditions and ensuring the integrity of the 1:1 backing mechanism
5. Operational Guides
The guides below provide high-level overviews for first-time users. Detailed technical implementation guides will be available as separate documents upon launch.
5.1 Wallet Requirements
Bitcoin side: No special setup required—any wallet that can send BTC to a Taproot address (e.g., Sparrow, Ledger Live, BlueWallet) will work when you deposit into the bridge.
For Canton: Yes. After your Bitcoin is bridged, CBTC lives on Canton, so you'll need a wallet that understands Canton tokens. Today that list is short—BitSafe Console and the Canton CLI are fully supported, with additional wallets coming as the ecosystem progresses
5.2 Run a Minter Application
A Minter Application enables institutions to offer CBTC deposit and withdrawal services to their users. As a Minter, you'll coordinate between Bitcoin deposits and Canton token issuance.
Prerequisites
Minter Credential (Get yours here)
Bitcoin infrastructure for monitoring deposits and managing withdrawals
Canton participant node for interacting with CBTC contracts
Integration with the decentralized Attestor network for transaction approvals
High-Level Process
Running a Minter Application involves monitoring Bitcoin addresses for user deposits, coordinating with Attestors for verification, and triggering CBTC minting on Canton. The bridge also handles the reverse process for withdrawals, burning CBTC tokens and facilitating Bitcoin payouts.
Operational Considerations
Monitor Bitcoin network for deposit confirmations (6 blocks required)
Coordinate with the governance module for Attestor approvals
Manage periodic checks every 60-120 seconds for processing transactions
5.3 Run an Attestor Node
Attestor Nodes form the decentralized security backbone of CBTC, independently verifying all mint and burn operations through Canton's governance system
Prerequisites:
Technical infrastructure capable of running both Bitcoin and Canton nodes
High-Level Process
Attestors monitor Bitcoin transactions, verify deposit and withdrawal requests, and submit confirmations through Canton's governance module. Each important action requires group approval, ensuring no single party can unilaterally control minting or burning.
Operational Responsibilities
Independent verification of Bitcoin transactions reaching 6 confirmations
Submission of ConfirmDepositAction for mints and ArchiveWithdrawRequest for burns
Participation in the threshold approval process with other Attestors
Maintenance of both Bitcoin monitoring and Canton governance infrastructure
Note: Almost all of these responsibilities are automated with the only exception being governance (adding/removing nodes) which requires coordination between operators
5.4 Spin Up a Canton Node/Instance
Running a Canton Node allows institutions to participate directly in the CBTC ecosystem, whether as holders, minters, or service providers
Prerequisites:
Appropriate CBTC credential (Holder or Minter)
Technical infrastructure for running Canton participant nodes
Integration capabilities for connecting to the broader Canton network
High-Level Setup
Canton nodes participate in the privacy-preserving, deterministic ledger that hosts CBTC contracts. Your node will process transactions, maintain contract state, and interact with other participants through Canton's encrypted messaging system.
Key Components
Participant node for transaction processing and contract interaction
Connection to Canton's sync domain for coordinated state updates
Integration with CBTC governance contracts for credential verification
API endpoints for application integration (if providing services to end users)
6. Glossary
Attestor — Independent nodes that monitor Bitcoin, verify deposits and burns, and participate in the governance process to approve transactions.
CBTC — A 1:1 wrapped Bitcoin token built for secure trading and bridging on Canton.
Burn — The process of destroying CBTC tokens on Canton to initiate Bitcoin withdrawal.
Coordinator — The service that executes periodic checks, monitors deposits, and coordinates with Attestors.
DepositAccount (DA) — A Canton contract template that represents a deposit account, with each DA having a unique ID that deterministically maps to a Bitcoin deposit address.
Mint — The process of creating new CBTC tokens on Canton after confirmed Bitcoin deposits.
Periodic Check (PC) — A recurring process executed by the Coordinator every 60 to 120 seconds to trigger actions based on Bitcoin and Canton data.
WithdrawAccount (WA) — A Canton contract template representing a withdrawal account that stores a user-defined destination Bitcoin address.
WithdrawRequest (WDR) — A Canton contract template instantiated during withdrawal processing, containing the withdrawal amount, Bitcoin transaction ID, and destination address.
7. Future Extensions
The system has been designed to support future enhancements while maintaining the core mint-burn functionality described in this documentation.
Following are some ways to increase the functionality of CBTC:
Node operator rewards: As a validator securing CBTC, you'll earn additional rewards from minting activity
Customer minting: You can potentially mint CBTC on behalf of customers, earning Canton coin rewards to share with them
Utility-based rewards: Canton is shifting toward rewarding apps that create actual trading and financial activity, which should benefit CBTC holders
8. FAQs
What is CBTC?
CBTC is a 1:1 wrapped Bitcoin token designed for secure bridging and trading on the Canton Network
Who can use CBTC?
CBTC is tailored for institutional Bitcoin holders, with the Holder Credential enabling access
What's the process to get started?
Fill out a questionnaire with your legal entity information and review the license agreement (MSA)
Set up the Canton Credentials Manager utility from DigitalAsset
BitSafe will then send over a DocuSign contract
Sign the agreement and accept the credential
Make the deposit upfront in Canton Coins
Start earning daily rewards (manually distributed by BitSafe initially)
What is a holder credential and how does it work?
A holder credential grants the right to request deposit addresses and invoke the CBTC.Issuance mint choice. Anyone on Canton can buy one, and once approved, you receive a share of the app rewards distributed equally among all credential holders across the Canton ecosystem.
What are the transaction fees?
Current transaction fees are 5 basis points for minting/burning and 3 basis points for transferring/locking/unlocking
How are rewards distributed?
Canton rewards are shared equally among credentialed users, scaling with adoption, based on 10-minute billing cycles
Who operates the CBTC bridge nodes?
9 pre-screened external node operators (e.g., P2P, Everstake) and 1 BitSafe node, each with AUM >$1B, run both Bitcoin and Canton nodes
Is the process automated?
Yes, the minting and withdrawal processes are fully automated, requiring no manual coordination
Does CBTC follow Canton’s token standard?
Yes, CBTC uses the registry utility and will adopt the universal token standard as and when viable
Do I need special wallets?
Bitcoin side: No special setup required—any wallet that can send BTC to a Taproot address (e.g., Sparrow, Ledger Live, BlueWallet) will work when you deposit into the bridge.
For Canton: Yes. After your Bitcoin is bridged, CBTC lives on Canton, so you’ll need a wallet that understands Canton tokens. Today that list is short—BitSafe Console and the Canton CLI are fully supported, with additional wallets coming as the ecosystem matures.
Do I need to be running a validator to participate?
Yes, you need to have a live validator and a validator address on Canton mainnet to receive credentials
Are there any KYC/KYB requirements?
No additional KYC/KYB is required between app creators because acceptance into Canton requires sponsorship by a Supervalidator
What future opportunities are available?
Node operator rewards: As a validator securing CBTC, you'll earn additional rewards from minting activity
Customer minting: You can potentially mint CBTC on behalf of customers, earning Canton coin rewards to share with them
Utility-based rewards: Canton is shifting toward rewarding apps that create actual trading and financial activity, which should benefit CBTC holders
Why is this a good time to join?
Canton currently has only 9 apps, and CBTC will be the 10th. The ecosystem is in the early bootstrap phase, so rewards are shared among fewer participants. Canton is moving away from rewarding passive apps (like block explorers) toward apps that generate real utility and trading volume, which positions CBTC favorably for future reward increases
What if I have more questions?
Email [email protected]
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