The integration of native Bitcoin into the Avalanche ecosystem marks a pivotal advancement in cross-chain interoperability. With the recent expansion of the Avalanche Bridge to support Bitcoin, users can now seamlessly transfer BTC to Avalanche and access its rapidly growing decentralized finance (DeFi) landscape. This article provides a comprehensive technical breakdown of how Bitcoin is bridged to Avalanche, the underlying security architecture, address derivation mechanisms, transaction handling, fee structure, and UTXO management.
How the Avalanche Bridge Works with Bitcoin
The Avalanche Bridge leverages Intel SGX (Software Guard Extensions), a hardware-based security technology that creates isolated, tamper-proof execution environments known as secure enclaves. These enclaves ensure that private keys used for cross-chain transfers are never exposed—even to system administrators or malicious actors with physical access.
For Bitcoin integration, a new SGX application has been developed specifically to handle BTC transfers. This application operates in conjunction with a decentralized network of third-party validators called Wardens. The current set includes Halborn, Avascan, Bware Labs, Ankr, Chainstack, Protofire, Blockdaemon, and Ava Labs. These Wardens index both the Bitcoin and Avalanche blockchains, verify transactions, and submit approvals to the SGX enclave.
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Only when at least 6 out of 8 Wardens agree on a transaction does the enclave proceed with minting or releasing assets—ensuring robust consensus and resistance to single points of failure.
BTC.b: The Bridged Bitcoin Token on Avalanche
When Bitcoin is transferred to Avalanche via the bridge, it is represented as BTC.b, an ERC-20 token on the Avalanche C-Chain. The .b suffix denotes that the asset was bridged from Bitcoin, following the same naming convention as Ethereum-bridged tokens ending in .e.
Each BTC.b token is fully backed by one native BTC locked within the bridge’s SGX-controlled wallet. This 1:1 backing ensures trustless convertibility and price parity.
You can view the official BTC.b contract on Snowtrace at: 0x152b9d0fdc40c096757f570a51e494bd4b943e50
And track the bridge’s Bitcoin address here: bc1q2f0tczgrukdxjrhhadpft2fehzpcrwrz549u90
Bridging Flow: From Bitcoin to Avalanche and Back
Bitcoin → Avalanche (Minting BTC.b)
- The user initiates a transfer using the Core Wallet extension, sending BTC to the bridge’s SGX-controlled address.
- The bridge only accepts Pay-To-Witness-Public-Key-Hash (P2WPKH) outputs—ensuring compatibility and security.
- Once confirmed on the Bitcoin blockchain (after required block confirmations), Warden nodes index the transaction.
- Upon receiving approval from at least 6 Wardens, the SGX enclave mints an equivalent amount of BTC.b and sends it to the user’s linked Avalanche address.
Avalanche → Bitcoin (Unwrapping BTC)
- The user calls the “unwrap” function on the BTC.b contract, burning their tokens.
- Wardens detect this burn transaction and report it to the SGX enclave.
- After validation by the required majority of Wardens, the enclave signs a Bitcoin transaction returning native BTC to the user’s derived Bitcoin address.
This bidirectional mechanism ensures full reversibility while maintaining decentralization and security.
Address Derivation Across Chains
A core challenge in cross-chain bridging is reconciling different address formats. While Ethereum and Avalanche both use EVM-compatible addresses derived from public keys, Bitcoin uses its own distinct scheme.
To maintain a unified user experience:
- When bridging BTC → Avalanche, Wardens recover the public key from the signed Bitcoin transaction and use it to derive the corresponding C-Chain address.
- When unwrapping BTC.b → BTC, the reverse happens: the public key from the Avalanche burn transaction is used to generate the recipient Bitcoin address.
This ensures that both chains use keys controlled by the same private seed—without ever exposing sensitive data outside the user’s wallet.
However, most Bitcoin wallets are hierarchical deterministic (HD), generating new addresses per transaction for privacy. This conflicts with EVM-style expectations where funds go to a single address.
To solve this, the Core Wallet extension uses a single private key for both Bitcoin and Avalanche operations—enabling seamless cross-chain transfers without fragmenting balances across multiple addresses.
While this reduces some privacy benefits of HD wallets, it offers a practical trade-off for usability in multi-chain environments.
Bitcoin Transaction Construction Using UTXOs
Unlike EVM chains that use account-based models, Bitcoin relies on a UTXO (Unspent Transaction Output) model. Every transaction must explicitly define inputs (sources) and outputs (destinations).
Since the SGX enclave doesn’t track UTXO states, it delegates this responsibility to Wardens:
- When a user requests to unwrap BTC.b, one Warden proposes which UTXOs should be spent.
- All Wardens then validate the proposal and construct a raw transaction using those inputs.
- If at least 6 Wardens produce identical transactions, the enclave signs it securely and broadcasts it via the Warden network.
If consensus isn’t reached, another Warden proposes a new set—ensuring fault tolerance.
Critically, the signing key remains encrypted within the SGX enclave at all times.
Bridge Fees: Predictable Costs in a Variable Environment
Bitcoin transaction fees depend on transaction size, which varies based on the number of UTXOs consumed and created—making precise fee prediction difficult.
To provide users with predictable costs:
- The bridge calculates an expected fee based on average UTXO size and transfer amount.
- Users are charged this estimated fee upfront.
- Any surplus funds feed into a bridge fee pool, which covers deficits when actual fees exceed estimates.
- This “leave-a-penny, take-a-penny” model smooths out volatility and enhances user experience.
The system is designed with a slight positive inflow bias to maintain long-term sustainability.
UTXO Management: Avoiding Dust Accumulation
Poor UTXO management leads to dust accumulation—tiny outputs that cost more to spend than they’re worth—increasing future transaction fees.
To mitigate this:
- Minimum transfer size: Only deposits ≥ 0.00125 BTC are processed (subject to adjustment).
- Target change amount: When building transactions, Wardens aim to create change outputs above dust thresholds.
UTXO consolidation strategy:
- Unconfirmed change UTXOs are prioritized (supporting child-pays-for-parent inclusion).
- Otherwise, older UTXOs are aggregated first—gradually consolidating small inputs into larger ones.
This approach balances efficiency with simplicity and long-term scalability.
Frequently Asked Questions (FAQ)
Q: What is BTC.b?
A: BTC.b is an ERC-20 token on Avalanche representing native Bitcoin 1:1. It is minted when BTC is locked in the bridge and burned when redeemed back to Bitcoin.
Q: Is my private key ever exposed during bridging?
A: No. Your private key never leaves your wallet. Address derivation uses public keys recovered from signed transactions—no secret data is shared.
Q: Can I use any Bitcoin wallet to bridge?
A: For optimal experience, use the Core Wallet extension. It supports unified key management between Bitcoin and Avalanche, ensuring correct address derivation.
Q: Why does the bridge have a minimum deposit size?
A: To prevent dust accumulation and reduce network congestion. Small UTXOs increase future transaction costs and are inefficient to process.
Q: How are bridge fees determined?
A: Fees are based on expected Bitcoin transaction costs using average UTXO sizes. A balancing pool handles overages and shortfalls for consistent pricing.
Q: Who secures the Avalanche Bridge for Bitcoin?
A: Eight independent Wardens monitor transactions and validate transfers. At least six must agree before any action is taken by the SGX enclave.
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Conclusion
The extension of the Avalanche Bridge to support native Bitcoin unlocks powerful opportunities for DeFi innovation. By combining Intel SGX security, decentralized Warden validation, intelligent UTXO management, and seamless cross-chain address mapping, this solution sets a new standard for trustless interoperability.
As more users bring Bitcoin into Avalanche’s high-performance ecosystem, we’re witnessing a convergence of two of crypto’s most valuable networks—ushering in a new era of composability, liquidity, and utility.
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