Sui's Hashi Protocol Aims to Redefine Bitcoin Finance Trust Rules with 20+ Institutional Backing

Author: Schen TechFlow

While market attention has recently been drawn away by U.S. stocks, AI, and gold in turn, Sui has recently announced a new development:

Hashi, a Bitcoin-collateralized primitive built on Sui, is set to launch with support from a number of top-tier institutions.

Bitcoin finance, a frequently discussed yet still unresolved topic:

As the largest vault of on-chain assets with a market cap exceeding $1.4 trillion, Bitcoin's usage in DeFi currently remains below 0.22%.

The core reason for the confusion is not insufficient functionality, but an incorrect foundation of trust. In many past attempts, users have been misled into thinking their Bitcoin is in their own possession, when in fact it’s on someone else’s ledger. The collapses of projects like Celsius, Voyager, and Genesis have repeatedly sounded the alarm on the logic of sacrificing trust for efficiency.

In particular, synthetic Bitcoin, despite attracting a significant number of retail investors, has failed to channel substantial amounts of Bitcoin into DeFi liquidity and does not appeal to institutions and large asset holders requiring stronger safeguards.

This was also a key catalyst for the creation of Hashi, Sui's newly launched developer primitive:

Rebuild the foundational trust of Bitcoin finance.

Enable native BTC collateral to be organized transparently within Sui’s smart contract environment—without wrapping, synthesizing, or handing over keys to any centralized entity—and turn this capability directly into a reusable interface.

The design philosophy of Hashi can be summarized in one sentence:

Assets are on the Bitcoin network, while rights are on the Sui network—both can exist simultaneously without interfering with each other.

If you own one Bitcoin and would like to use it as collateral to borrow USDC.

In most previous solutions:

You either deposit your BTC into a centralized platform to receive a loan limit, or you accept Wrapped BTC. At some point, your Bitcoin must be handed over to someone else—essentially, you’re trading “trust in an entity” for “programmability.”

And in Hashi:

• Deposit: Users deposit BTC into a dedicated address (a unique Bitcoin deposit address generated by Hashi for their Sui address). The private key for this address is not held by any individual but is jointly managed by validators on the Sui network. The BTC can only be accessed when a sufficient number of validators reach consensus. This means no single entity can steal your funds unless they simultaneously control more than one-third of the entire Sui validator network.
• Credential Generation: Validators simultaneously monitor the Bitcoin network. Once they confirm that your BTC has been securely locked, they generate a corresponding collateral credential on the Sui chain. This credential is not a newly issued token or a wrapped asset—it is an on-chain proof that a genuine BTC has been locked and is owned by you.
• As collateral: With this token, you can borrow funds, participate in DeFi, and set up yield strategies within Sui's smart contracts. All rules are written in code and executed automatically—no one can interfere.
• Repayment and Withdrawal: After repayment, validators automatically release native BTC on the Bitcoin mainnet via MPC threshold signatures, allowing withdrawal to any Bitcoin address—no manual intervention required.
• Guardian Layer: To guard against extreme scenarios—such as validator collusion—Hashi has added a Guardian Layer as a secondary check and fallback safeguard, primarily monitoring large withdrawals or abnormal thresholds to prevent potential systemic risks.

Throughout the lifecycle:

BTC always remains on the Bitcoin mainnet and is never moved into a platform's internal account;

No single centralized entity has exclusive control over the private key;

On Sui, tradable rights backed by real BTC are circulating, restoring the programmability of native BTC;

And the only entities users need to trust are the validator network and the smart contracts.

In simple terms, Hashi is focused on enabling on-chain financial systems to directly recognize native BTC collateral without relying on centralized entities.

When the market is stable, users may barely notice this difference, but during extreme events such as platform failures or liquidity crises, it’s the difference between keeping your BTC or losing it.

By design, Hashi is a more decentralized, trust-minimized, and secure transparent Bitcoin financial solution.

However, viewing Hashi solely through the lens of a single "solution" may cause you to miss its most promising aspects.

Keep in mind that for a long time, Sui has been steadily evolving from a single chain into a comprehensive developer infrastructure—whether through the launch of Walrus, Seal, or Nautilus—all aimed at delivering end-to-end native capabilities across execution, storage, access control, and off-chain computation to empower developers and lay the essential foundation for ecosystem growth.

This time, Bitcoin finance is no exception.

According to the official definition:

Hashi is the first decentralized Bitcoin collateral primitive developed by Mysten Labs, enabling developers to actively process Bitcoin network UTXOs within Sui's native smart contract language.

The keyword is "primitive."

In the context of blockchain and DeFi, primitives often refer to fundamental building blocks or underlying infrastructure components, much like a "standard brick" in LEGO sets:

It is not a end-user product, but a foundational module for developers to build products.

Just as TCP/IP is not an app, but all apps run on top of it; Hashi is not a product, but lending platforms, yield strategies, and structured products can all be built on top of it.

In other words, Hashi does not provide a closed financial service, but rather a foundational capability that enables native BTC to serve as collateral directly callable by Sui smart contracts.

Hashi does not determine how, when, or under what rules this collateral is used—it leaves those decisions to the smart contract, the developers, and the market.

Before Hashi, developers aiming to build a protocol collateralized by BTC faced significant challenges: either accept the trust risks of centralized custody or implement the entire complex logic for native BTC collateral from scratch.

Hashi, as a primitive, turned this challenging problem into a directly reusable interface.

Now, developers can directly leverage Hashi’s built-in mechanisms when building specific products, enabling their protocols to natively support BTC collateralization without having to solve underlying issues from scratch, significantly reducing development barriers and time costs.

Users, whether institutional or retail, will for the first time truly gain the ability to earn yield on their Bitcoin without relinquishing control, through products built on Hashi. At launch, lending will be Hashi’s primary use case, enabling Bitcoin to be lent out or used as collateral to borrow stablecoins. In the future, Hashi’s ecosystem will expand to include a wide range of applications such as vaults, insurance, structured products, credit derivatives, and RWA yield strategies.

Bitcoin is the asset with the broadest global consensus and deepest liquidity, but historically, this wealth was nearly invisible to the on-chain financial world: it is massive, yet unprogrammable; it is valuable, yet cannot be directly sensed or invoked by smart contracts.

Therefore, when Hashi turns native BTC collateralization into an interface that any developer can directly call, the potential for upper-layer applications extends far beyond any single product or protocol.

The correctness of this judgment has already been answered by the extensive institutional support Hashi has garnered.

Hashi is currently live on the Sui Devnet, primarily for developer testing and auditing, and has not yet entered production. However, it has received clear support commitments from several leading industry institutions.

Regarding custody and infrastructure: Major institutions such as BitGo, Blockdaemon, Cobo, and Ledger directly enable the pathway for institutional BTC to move from cold storage into on-chain staking.

In terms of trading and liquidity: Major institutions such as FalconX, Bullish, and CF Benchmarks provide Hashi with reliable pricing, liquidity outlets, and institutional-grade counterparty support.

Looking at security and compliance: Multiple teams, including security audit firm OtterSec, smart contract formal verification company Certora, and cryptography and zero-knowledge proof research and engineering team Asymptotic, have chosen to support Hashi by conducting smart contract audits, formal verification, and cryptography and zero-knowledge proof research prior to Hashi’s mainnet launch.

Meanwhile, projects including Suilend, Scallop, NAVI Protocol, Matrixdock, and Bluefin have announced plans to integrate Hashi, unlocking the potential of on-chain finance and enabling retail and institutional users to quickly access BTC-collateralized lending and borrowing.

In addition, Soter Insure, a solution provider specializing in institutional-grade insurance, has announced a partnership with Hashi to integrate an institutional-grade insurance mechanism as a risk protection layer.

These institutions represent hundreds of billions of dollars in Bitcoin notional value and mature compliance infrastructure; their commitment to integration during the Hashi Devnet phase means that, once Hashi officially launches, substantial institutional Bitcoin assets will have the practical capability to enter on-chain scenarios.

At the same time, looking at these more than 20 institutions together reveals an interesting observation: they collectively cover nearly every segment required for a complete Bitcoin financial ecosystem.

From secure custody of Bitcoin, on-chain collateralization, price pricing, liquidity support, lending protocols, yield strategies, and RWA integration, to security audits and user onboarding, an end-to-end ecosystem is already taking shape.

In other words, a complete Bitcoin financial ecosystem built around Hashi primitives will be ready from day one of the Hashi mainnet launch.

Of course, Hashi is still in the Devnet stage and has not yet been tested over the long term in a mainnet environment with real asset volumes and extreme market volatility; its production-grade performance still requires time to be validated. The path to Bitcoin finance has never been made smooth overnight by the emergence of a new primitive.

However, the commitment from over 20 leading institutions to integrate on Day One—covering custody, liquidity, security, protocol layer, and more—clearly demonstrates market recognition of this path.

The story of Bitcoin finance has been told for many years, but the real breakthrough has never been about "what it can do," but rather "why trust it."

Past solutions, whether centralized custody or wrapped assets, essentially forced users to make the same choice: either give up control to earn returns, or hold onto their keys but be locked out of on-chain finance.

Hashi is attempting to rewrite the very nature of this problem: enabling native BTC collateralization as a底层 interface that developers can directly call, allowing Bitcoin—the dormant trillion-dollar vault—to be truly "seen" by the smart contract world for the first time in a non-custodial, verifiable, and composable manner.

Rebuilding trust is often harder than adding features.

If the ultimate goal of Bitcoin finance is to make Bitcoin the native collateral of on-chain finance, then what Hashi is doing may be driving the first桩 into the foundation of this bridge.