tBTC. Game changer?
Brining BTC to DeFi not as easy as it might seem.
This year can certainly be named after DeFi, the amount of funds locked in ecosystem have been grooving exponentially since beginning of 2020. For the beginning of the year total value of founds locked in DeFi were 690m$ but today this number is 8,95B$. Incredible growth which BTC holders watch mostly from outside. Although since the beginning of the year the number of tokenized BTC in has increased by 1200%, this is nowhere near what we can observe in ETH.
BTC that can be used in Ethereum DeFi ecosystem consists for now mostly of 2 projects: WBTC and renVM. According to defipulse.com both of them have been able to move into Ethereum ecosystem only 44,5k BTC as of the end of August. This is only 0.24% of current circulation supply and 0,5B$. Why is this so and who can be the game changer? Let’s find out.
WBTC
WBTC is the first Ethereum token designed to bring increased liquidity to DeFi apps. So far it has achieved the most adoption. Wrapped BTC launched on Ethereum mainnet in January 2019 by several major players in DeFi ecosystem and now controlled by a Decentralized Autonomous Organization (DAO) called the WBTC DAO. But don’t bet on it, WBTC minters have to pass KYC and BTC used for minting WBTC are held by custodians. Sounds pretty centralized? Next project is trying to solve this problem.
renBTC
renBTC is relatively new project designed by REN, an open protocol created to facilitate cross-chain liquidity transfers between blockchains such as Ethereum. Unlike WBTC, which uses a system of trusted third-party custodians to mint new WBTC tokens, renBTC is generated or destroyed using smart contracts in decentralized way. But this is only in the future. At present RenVM incrementally, and slowly progress from centralised to decentralised. At present RenVM in the early days of phase sub-zero which means. During this phase, only one group of nodes is responsible for consensus and execution: Greycore which is run by Ren team.
Thereby we don’t have trustless decentralize way to represent BTC on Ethereum blockchain. In decentralized finance sphere.
Ok, lets talk about tBTC.
tBTC
But first we need to say a word or two about Keep Network. It is a privacy layer for blockchains that allows users and applications to store data privately. Keep’s core application, the Random Beacon, provides this source of randomness and aims to ensure an individual signer cannot decode the information stored in the network. The network consists of node operators called signers that stake KEEP tokens to store and manage private data in exchange for a service fee.
Сombining this we get the first use case for Keep Network — tBTC. tBTC is a fully Bitcoin-backed ERC-20 token pegged to the price of Bitcoin. Unlike its competitors it’s going to be fully decentralized from the beginning. tBTC is an open-source project supported by groups including Keep, Summa and the Cross-Chain Group. Moreover, it has strong community.
tBTC is a trust-minimized model. Signers are overcollateralized to 150% the value of the deposit they custody, and users are fully protected in the event of signer fraud. Signers are chosen from an open and decentralized network of nodes that run the Keep protocol.
Okay, let’s try to summarize what has been said:
Instead of a conclusion
Tokenizing bitcoins on Ethereum is “the biggest opportunity for decentralized finance’s growth today,” said Andy Bromberg, president of CoinList in an email to CoinDesk.
Additional resources:
- Keep’s GitHub
- The tBTC Technical spec
- tbtc.js
- The Keep #tbtc channel on Discord
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