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Interlay (interBTC) is a parachain that allows users to use their BTC on other parachains by locking up BTC in vaults, which, if I understood correctly act as a network of verifiers. How can I run an interBTC vault and what are the advantages to running one?

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From the documentation, to become a Vault you need:

  • A Vault client.
  • A Bitcoin full node.
  • A Polkadot account (public/private keypair).
  • Some KSM/DOT to provide as collateral and pay for transaction fees.

As for the advantages, running a Vault allows you to earn fees and rewards:

  • All Vaults are part of a fee pool and earn fees in interBTC when any user issues or redeems interBTC.
  • Vaults on Kintsugi receive a KINT block reward.
  • Planned feature: subject to governance, Vaults are able to provide collateral in liquid staked assets like LKSM or LDOT to receive both staking rewards from the relay chain and the rewards form the Kintsugi/interBTC bridge.

In addition, you can be your own Vault if you're a large liquidity provider and don't want to rely/trust other Vaults. In this case you retain custody over your BTC holdings until you sell interBTC.

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  • Ah the collateral is put up by the vault not the user. Can you redeem your kBTC from any vault or does it have to be the vault that you put the BTC into in the first place?
    – Squirrel
    Apr 2, 2022 at 11:30
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    From what I could find in docs.interlay.io/#/vault/overview?id=vault-isolation you can redeem from any vault though with some considerations.
    – CustomBlink
    Apr 2, 2022 at 16:10
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    Thanks for the answer @CustomBlink - just did a little formatting =)
    – Sacha Lansky
    Apr 3, 2022 at 6:52
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In additional, there's a guide to run a vault.

https://docs.interlay.io/#/vault/installation

With Docker/Docker Compose

Setup the Vault client using docker-compose. This guide is only for the testnet, please follow the Standard Installation for Kintsugi.

  1. Install docker and docker-compose
  2. Download the docker-compose file

Or without Docker:

Run Bitcoin and the Vault binary as a service on your computer or server. > Follow this guide if you are interested in operating a Vault for earning and participating in the protocol.

  1. Install a Bitcoin node
  2. Install a pre-built binary
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