This week, the Sui Foundation and Mysten Labs released a test version of Hashi, a new system that allows Bitcoin to be used as collateral for loans directly on the Sui blockchain, all without moving the Bitcoin off the original Bitcoin network.
Key Takeaways
- Sui Foundation launched Hashi’s testnet July 22, letting Bitcoin collateralize decentralized finance (DeFi) loans without wrapping.
- Over 25 institutional partners, including Bitgo, Cumberland and Wave Digital, are testing Hashi.
- Hashi targets a slice of bitcoin’s $1.4T market as Mysten Labs eyes a mainnet launch next.
A Bridge Built to Avoid Bridges
The Sui Foundation and Mysten Labs confirmed Hashi’s testnet went live on July 22, the latest step in a project designed to let bitcoin function as collateral in onchain lending and credit markets without wrapping it into a synthetic token or bridging it to another chain (the two approaches that have repeatedly caused losses across DeFi).
Sui first announced Hashi at the devnet stage back in March, positioning the protocol as a way to unlock capital efficiency across bitcoin’s roughly $1.4 trillion market.
According to Adeniyi Abiodun, co-founder and Chief Product Officer of Mysten Labs, Bitcoin isn’t unique when it comes to creating credit markets. He explains that Hashi offers the necessary foundation to build these markets directly on the blockchain, providing the security, transparency, and flexibility that institutions are looking for.
How Hashi Actually Works
Hashi stores bitcoin directly on the Bitcoin network, avoiding transfers or creation of new coins on other platforms. To secure deposits, Hashi uses a special security setup called ‘2-of-2 multisig,’ meaning two approvals are needed for any transaction. These approvals come from Hashi’s own security system and a separate ‘Guardian Layer’ – a customizable system that can delay or stop potentially fraudulent withdrawals before funds are moved.
Loan details and the assets securing them are recorded directly on the blockchain, allowing lenders to see exactly how much Bitcoin supports each loan instead of trusting a middleman to provide that information.
This design also offers a tax benefit compared to other options. Legal experts at Sui have determined that the way deposits and withdrawals are handled shouldn’t create taxable events under U.S. law, which is an important consideration for institutions deciding whether to use their bitcoin or leave it unused.
Why the Wrapped-BTC Risk Is Real
The risk Hashi is built to sidestep isn’t hypothetical, and Sui’s own ecosystem has already lived through it. Volo Protocol, a liquid staking and bitcoin-finance platform also built on Sui, lost $3.5 million in an April 2026 exploit after an attacker compromised a vault admin’s private key, draining roughly $2.1 million in wrapped bitcoin (WBTC) from three vaults. That’s the exact failure mode (i.e. a single custodial key controlling wrapped collateral) that Hashi’s multisig-plus-Guardian-Layer design is meant to make far harder to pull off.
Sui has taken other paths to bitcoin liquidity too. Threshold’s tBTC went live on Sui as a decentralized, non-custodial wrapped bitcoin alternative, and the Sui Bridge separately launched on mainnet to move assets like ether between Ethereum and Sui. Hashi is a different bet where rather than wrapping or bridging bitcoin at all, it leaves the asset on Bitcoin’s own chain and settles everything else around it.
Who’s Already Testing It
More than 25 institutional partners are already stress-testing lending and credit applications on the testnet, including custody giant Bitgo, trading firms Cumberland and FalconX, hardware wallet maker Ledger, infrastructure provider Blockdaemon, exchange Bullish, and Sui-native lending platforms Navi and Scallop.
Wave Digital Assets plans to focus on creating tokens representing bonds that earn interest in Bitcoin on the Sui blockchain after the Hashi network launches. This demonstrates growing confidence from established financial companies that Sui is becoming a serious platform, not just another temporary project in the decentralized finance space.
Currently, Hashi hasn’t announced when its main network will launch. The current testing phase allows developers and financial institutions to build and integrate lending and borrowing features before actual funds are involved. If the test goes well, Hashi could offer Bitcoin owners a way to earn rewards on their BTC directly, avoiding the security risks that recently caused problems for Volo Protocol.
2026-07-24 14:58