Keep’s Bitcoin Pegged ERC-20 token, tBTC, Begins Launch With Support From Key DeFi Players
tBTC – the much talked about Bitcoin pegged ERC-20 token, which was created by an individual who aimed to secure a loan against his BTC holding, but couldn't find any institution or platform offering such services decided to make one himself.
To summarize, tBTC can be put into collateral just like Ether on Decentralized Finance platforms, which in turn allows the depositor to obtain a loan backed against the deposited amount without losing the ownership.
Covering 75% of the DeFi Market, #tBTC is launching with the support of over 40 industry leading partners!
— Keep #tBTC (@keep_project) April 29, 2020
The first phase rollout process would see the launch of the native token KEEP along with some key smart contracts. The tBTC project has garnered support from over 40 projects.
How Does a Bitcoin Pegged Token Function on Ethereum Blockchain?
The concept itself is quite unusual, but tBTC serves as an ERC-20 (fungible) token that is backed in value by Bitcoin. While the mix of Bitcoin and Ethereum protocols sounds impossible. In reality, the token itself is almost like a promissory note relative to how much Bitcoin is worth.
The token was created with the collaboration of Ethereum based KEEP network primarily known for storing data off-chain, and Summa, a network known to offer tools for cross-chain communication.
The native token on the platform KEEP would be required by ‘Signer.’ These Signers are responsible for managing smart contracts which intakes Bitcoin deposits and mint tBTC token against it.
On Monday, the developer community launched the native token KEEP along with smart contracts required for holding and staking tBTC. At present, the role of Signers would be offered to project partners, employees and affiliates like A16z and Polychain.
Matt Luongo, tBTC’s project chief, revealed that 80-100 stakers would be ready by the time of launch. Later in June, they would hold a Stakedrop event which will launch the staking services for common public, allowing anyone to stake ETH and receive KEEP token in return which in turn would allow them to become a Signer on the platform.
After the current roll-out of KEEP token and its technical infrastructure, the firm is planning to launch tBTC Dashboard and remaining infrastructure. By May 11th, the whole tBTC infrastructure would be made accessible to the public.
However, the project lead advised the public to begin slowly as the system is new which would make it vulnerable to bugs in initial stages.
How tBTC is Different From Other Similar Bitcoin Staking Services?
While tBTC surely sounds like an innovative idea to help Bitcoin holders access the popular Defi ecosystem on Ethereum, but there are many other projects in the crypto ecosystem with similar functionalities.
For example, Wrapped Bitcoin (WBTC), Synthetix's sBTC and ImToken's imBTC all offer access to Bitcoin holders to the Defi ecosystem. However, tBTC functions quite similar to the Ether collateral on Defi, where people put their Ether in a smart contract and draw loans against it in DAI, and paying back the drawn DAI with interest allows them to recover their deposited ETH.
Similarly, tBTC holders can also certainly withdraw their Bitcoin whenever they wish to.
A user can go to the tBTC dAPP and create their Bitcoin wallet in the dApp and then deposit the amount of BTC they wish to purchase tBTC for. The tBTC balance would be visible in the Ethereum wallet. Now the users can either stake this tBTC to generate loan or send back the tBTC to their Bitcoin wallet to redeem their minted tBTC in bitcoin again.
Compound and MakerDAO to Integrate tBTC on Their Platform
Compound and MakerDAO have confirmed their interest of listing tBTC on their respective platforms, where Compound is already testing tBTC the Ethereum test network. Once launched on the main network, Compound users would be able to withdraw USD loans by collateralizing their tBTC.
Robert Leshner, CEO of Compound had earlier commented that they would be reviewing liquidity and security of tBTC before making a final decision on whether to launch it on their mainnet.
MakerDAO community, on the other hand, have already voted in favor of tBTC, whitelisted tBTC and also approved the ETH/BTC price oracle, which would allow them to maintain price feed for tBTC.
The network is also looking to launch the ERC-20 token on its platform, which would allow its users to draw DAI loans against it. Lungo believes it would be a big step towards making tBTC a viable Defi product. He elaborated
“The Maker team has been an excellent resource building tBTC, and we're pleased MKR holders just voted to deploy an ETH/BTC price feed to power tBTC. The inclusion of tBTC as collateral will be subject to a vote by MKR holders. Once they do that, we'll be off to the races.”