In three months from now, Bitcoin, the oldest cryptocurrency in the world will enter the Ethereum blockchain. WBTC, a fully Bitcoin backed ERC20 token will be released in January 2019 that will bridge the liquidity of Bitcoin with the highly decentralized Ethereum network. This will help to increase the number of use cases and applications for Bitcoin.
Leveraging Ethereum’s Dapp Ecosystem
The ERC20 token will be launched in January 2019 and help in creating decentralized applications on the Ethereum blockchain that could be used with the token. Specifications of the project will be made available on GitHub/Gitter before the launch. The community-focused initiative is a joint effort by BitGo, Republic Protocol and Kyber Network. The WBTC will be supported by Dharma, Airswap, Compound, MakerDAO, Hydro Protocol, IDEX, DDEX, Prycto, and Set Protocol. They will also participate as launch members for the WBTC.
To add initial liquidity to the project, Republic Protocol and Kyber Protocol will pre-mint some WBTC tokens from their own Bitcoin inventories and make the coins available to the users via atomic swap.
Talking about the unique token, Loi Luu, the co-founder, and CEO of Kyber Network said:
“This initiative will be bringing together the liquidity of Bitcoin and the extensive smart contract developer ecosystem of Ethereum. Applications on Ethereum such as decentralized exchanges and financial protocols will all be able to use Bitcoin seamlessly, creating bitcoin trading pairs which have been impossible until now. At the same time, the usage of Bitcoin will be expanded by having more decentralized use cases, such as exchange, loans, and token payments.”
Maintaining Openness and Transparency
BitGo will act as the custodian of the token at launch, supplying WBTC with institutional-grade crypto security. All WBTC issued will be fully verifiable on-chain. The project dashboard will also have a proof-of-reserve that shows a corresponding number of Bitcoins backs the amount of total outstanding WBTC. This will help to strengthen transparency within the initiative.
Only the custodian will mint new WBTC tokens. When WBTC token holders redeem their tokens for Bitcoin, their WBTC holdings will be burned. All transactions on WBTC will be verifiable on both blockchains.
Any project that intends to use WBTC can freely add it to their platform. The initiative will be community-driven right from the beginning, and the governance will be dictated via a Decentralized Autonomous Organization (DAO). The members of this organization will do public audits of the WBTC tokens to ensure that the balance of the custodian wallet matches with the smart contracts. Improvements in the project will also be proposed and decided upon by the DAO.