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WBTC, Bitcoin-backed stablecoin, launches on Ethereum blockchain

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A Bitcoin-Backed Stablecoin Has Launched on the Ethereum Blockchain Crypto Heroes

The stablecoin dubbed Wrapped BTC (WBTC) is backed one-to-one with Bitcoin and is expected to bring greater liquidity to the Ethereum network including decentralized exchanges (DEX) and financial applications.

WBTC has Bitcoin and Ethereum features

WBTC was officially launched as an ERC-20 token yesterday evening. The project was first introduced in October last year, with decentralized exchange startups Kyber Network and Republic Protocol alongside BitGo partnering on the project

According to the project’s website, “WBTC standardizes Bitcoin to the ERC20 format, creating smart contracts for Bitcoin. This makes it easier to write smart contracts that integrate Bitcoin transfers.”

BitGo’s CTO Benedict Chan in October described the stablecoin as having the stability of Bitcoin and the flexibility of Ethereum. He compared the stablecoin to traditional bank notes which were once redeemable for gold.

He pointed out that even though Bitcoin is more volatile compared to the US Dollar, it is the most liquid and stable cryptocurrency and has the highest market cap. The stablecoin was also listed on cryptocurrency market data site CoinMarketCap late yesterday, with 72.4214 WBTC on the Ethereum network at the time this article was written.

Merchants to control network

WBTC makes use of the atomic swaps technology to conduct cross-chain crypto trades. Ethereum users can request for the token from certified merchants after going through the AML and KYC procedures. Merchants play a crucial role in the exchange and liquidation of new WBTC tokens. The stablecoin’s whitepaper describes them as the institution or party to which wrapped tokens will be minted to and burnt from.

Minting here refers to the process of creating new wrapped tokens. Minting in the wrapped framework is initiated by a merchant and performed by a custodian. Burning meanwhile is the act of redeeming Bitcoin for WBTC tokens. Additionally, only merchant addresses can perform this function.

The WBTC team revealed that there are eight merchants at the moment to carry out conversion between WBTC and BTC. These merchants are AirSwap, Dharma, ETHfinex, GOPAX, Kyber Network, Prycto, Ren and Set Protocol.

WBTC to be traded on exchanges

Some crypto exchanges have already taken steps to support the live supply of the WBTC token on their platforms. WBTC’s team also revealed that some financially-focused dApps on Ethereum such as bZx, Compound, and dYdX, will allow immediate use of the WBTC token.

Ethereum creator, Vitalik Buterin expressed concern over the centralized nature of WBTC and hoped it become more decentralized soon.

WBTC team in their press release, however, maintained that they are a community-led initiative. “The fundamental design of WBTC and the continuing commitment of all member to openness will form the essential building blocks for a transparent process framework and governance structure,” they added.


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