First look at Diffuse Collateral

Intro

In a previous post we explored the concept of Collateral Abstraction as introduced by Symbiotic, a model for making collateral portable across chains, unlocking access to liquidity locked on other chains and enabling composable DeFi strategies without relying on bridges.

Today, we're taking that vision one step closer to reality. This article describes the first working demo of Diffuse Collateral that mints synthetic ETH (sETH) on one chain based on real ETH locked on another, without any trusted intermediaries. This is made possible by a trust-minimized proof stack combining zkTLS and zkServerless, allowing smart contracts on the destination chain to cryptographically verify the state of the source chain.

How it works

This is not a finished product yet, it’s an MVP that’s still work in progress. Right now, version 0.1 connects two chains:

• The source chain, where real assets (like ETH) are deposited

• The destination chain, where synthetic versions of those assets are minted and managed

  
  

There are on-chain smart contracts and off-chain zero-knowledge infrastructure involved, with the core components being:

• Position Manager contract (on the source chain)

  A smart contract that handles deposits and emits on-chain events when users deposit funds.

• Collateral watchtower (off-chain)

  An off-chain component that listens for events on the source chain and triggers zkTLS-based Eth prover.

• zkTLS-based prover (off-chain)

  A secure SGX enclave running a prover that generates cryptographic proofs of the source chain’s state by attesting to JSON-RPC responses (e.g., block data, logs, balances) via zkRPC.

• Synthetic Manager contract (on the destination chain)

  A smart contract that verifies submitted proofs and mints or burns synthetic assets on the destination chain.

  
  

This avoids the need for trusted bridges or oracles, keeping the system lean, verifiable, and chain-agnostic.

The flow looks like this:

1. User deposit assets like ETH on the source chain

2. Position manager contract emits a deposit event

3. Collateral watchtower catches the event and launches the prover

4. The zkTLS enclave proves the updated state of the source chain and returns the data to the watchtower

5. The watchtower submits the proof (an SGX quote) and state to the Synthetic manager contract

6. Synthetic manager verifies the proof and mints sETH into the vault contract on the destination chain

   
   

Why is this a game changer?

This MVP is a technical milestone: it proves that you can mint synthetic assets across chains without relying on trusted bridges or centralized signers. It might just be a first step in our approach to Collateral abstraction, but once fully implemented, Collateral abstraction can change the way we use assets and unlock new possibilities, where assets aren’t trapped in a single ecosystem but can flow securely across chains.

This demo lays the foundation for:

• Trust-minimized cross-chain liquidity

• Composable strategies that span multiple chains

• Unleashing locked collateral in siloed ecosystems.

  
  

What’s live with this MVP

• Version 0.1 is deployed across Ethereum Sepolia and Optimism Mainnet

• End-to-end flow with ETH → sETH synthetic mint

• SGX-based zkTLS prover for source chain attestation and Collateral watchtower for off-chain messaging

• CLI tools for testing and interaction

  
  

Check out this demo to see Diffuse Collateral in action https://x.com/DiffuseFi/status/1913208238880731317

What’s next

This MVP marks the first implementation of cross-chain collateral abstraction using zkServerless, and the next iterations are already work in progress. Version 0.1 focuses on ETH-only collateral abstraction, but future versions will explore:

• Assets estimation and calculating risk factors

• Multi-asset support - BTC & stablecoins, ERC-20s & LP tokens

• On-chain price conversion

• Bi-directional cross-chain messaging enabling secure withdrawals, confirmations, and error handling across chains

• Support for more source chains

• Batching and gas optimization

  
  

Conclusion

Diffuse Collateral MVP 0.1 is just a beginning. But it show the road to a future where collateral is fluid, programmable, and secure by design, and lays the groundwork for a new class of multi-chain restaking strategies.

We’re building in public — and we’re far from done.

• Check out the demo https://x.com/DiffuseFi/status/1913208238880731317

• Our tech - zkTLS open-source repo GitHub and trustless Data Feeds oracle GitBook

• Follow us on X to stay updated on the latest developments: @DiffuseFi

• And let’s get in touch if you’re interested in Diffuse Collateral.