Phases

1. Commit and Deploy The Coordinator finalizes H(x), Y, and T. It prepares the Taproot collateral script with repay, fallback, and default paths, and deploys the EVM escrow with mirrored commitments.

2. Fund Principal on EVM The Nexus Node funds the escrow with stablecoin principal. Lender keys remain under lender control.

3. Lock Collateral on Bitcoin The Borrower sends BTC to the Taproot script. Network confirmations start.

4. Prove and Disburse The Borrower submits an SPV proof of the BTC lock to the EVM escrow. After verification, the escrow disburses loan funds to the Borrower.

5. Quiet Term No on-chain liquidations occur. The Nexus Node maintains the protective BTC put hedge off chain for the duration of the loan.

6. Repay on EVM The Borrower repays principal plus interest to the escrow before or at T.

7. Withdraw and UnlockMain path using hash lock: The Nexus Node reveals x to withdraw on EVM. Once x is public, the Borrower uses it to spend the Taproot repay path and reclaim BTC. Fallback path using adaptor secret: If x is not available, the withdrawal process discloses or enables derivation of y. The Borrower completes the Taproot adaptor path with y and reclaims BTC. Liveness assist if required: If a party is unresponsive beyond the agreed window, the Cosigner assists with liveness according to preset rules. The Cosigner cannot move funds on its own.

8. Default at Maturity If repayment is not made by T, the lender spends the Taproot default branch after the timelock. The external hedge covers price risk by design.