tBTC is about to return, can it shake the monopoly of WBTC?
Written by: MacLane Wilkison, Co-founder and CEO of NuCypher
In the cooperation between NuCypher and Keep Network, perhaps the most overlooked is: tBTC v2 is about to debut.
BTC and DeFi
The king of encryption is Bitcoin BTC. With a network value of more than US$1 trillion, BTC is the real veteran OG among encrypted assets. Its current reputation in the mainstream society and the investment interest of financial institutions are much higher than other encrypted assets, and it comes from its The value narrative of “digital gold”.
BTC is “digital gold” with a network value of more than $1 trillion
But in other encrypted networks, especially in the decentralized financial DeFi ecosystem of Ethereum, creativity and project experiments are flourishing. Automated market maker AMM, lightning loan, algorithmic stable currency, encrypted mortgage stable currency, liquid pledge, insurance agreement, income aggregator: The pace and coverage of financial innovation are breathtaking, and the total lock-up value (TVL) is growing rapidly This is clearly highlighted.
The growth of DeFi TVL is amazing
It is completely logical to think that BTC will be the collateral with the highest gold content in the DeFi field. As a censored, permissionless digital gold, BTC should play an extremely important role. In reality, it is also correct to a certain extent. At present, there are about 200,000 BTC on Ethereum, which exist in various forms.
The total amount of BTC in Ethereum
However, the most common form of “BTC in Ethereum” is that BTC is hosted by a centralized service provider, and then the provider issues tokenized “BTC in Ethereum” (for example, wBTC). Almost all BTCs in Ethereum currently exist in this form.
But this approach runs counter to the decentralized spirit of the encryption field. Centralized packaging of BTC is permitted, cannot avoid the risk of being seized/censored, and there are only a few products to choose from. If there is a safe, permissionless option, what would be the TVL of “BTC in Ethereum”?
tBTC came into being.
tBTC, the decentralized “BTC in Ethereum”
tBTC is a permissionless and secure BTC anchor, which truly introduces digital gold into the DeFi field. It is the only decentralized option on the market today. tBTC replaces the centralized custodian model with a decentralized collection of signers. Through threshold encryption and encrypted economic incentives, tBTC makes it possible to mint BTC on Ethereum without permission.
In order to prove the basic feasibility of this method, tBTC v1 was launched on the Keep network last year. It contains a collection of 3-of-3 signers, requires the signers to significantly over-collateralize with ETH (150% of the BTC value), and brings high coinage costs to users. It has been successfully operated at present, with a circulation of approximately 1200 BTC. But tBTC v2 will provide DeFi with real-scale digital gold.
tBTC v2
V2 solves the expansion problem of V1 (small signer set, the complexity of ETH mortgage, and the high cost of minting).
It replaces 3-of-3 signer sets with at least 100 signer sets. It eliminates the requirement that the signatory be mortgaged with ETH, and only accepts NU or KEEP for mortgage. And partly through the integration of the second layer L2 protocol, greatly reducing the user’s minting cost.
In short, v2 makes tBTC a real competitor to wBTC on an economic basis, but maintains the completely permissionless and decentralized characteristics.
The security of v2 mainly relies on the honest majority assumption (for example, at least 51 signers in a set of 100 signers are honest). In rare cases, if a group of signers collude, the insurance pool will provide additional insurance support.
The encrypted assets in the insurance pool (for example, NU and KEEP) are deposited by the holders, and while obtaining interest income, they are prepared for insurance against fraud. As the Keep team explained in the previous article , the dual insurance strategy is highly scalable. Assuming that each wallet receives roughly the same amount of deposits, an insurance pool holding 0.45619% of the total market value of tBTC can underwrite the risks of user funds throughout the year.
Of course, the large-scale expansion of the set of signatories means that the upgrade from v1 to v2 requires a large-scale expansion of the number of pledgers.
NuCypher enters the game.
Integration of code name KEaNU
Various teams have been exploring the feasibility of building a decentralized asset bridge similar to tBTC on the NuCypher network. In view of the common interests and technical capabilities, the benefits of the cooperation between NuCypher and Keep are very compelling, especially when one considers the unique ability of the NuCypher network, that is, it can provide thousands of pledge nodes as signers of tBTC v2 , And this is what the new v2 design needs urgently need.
When tBTC v2 debuts on the NuCypher/Keep shared network, there will be thousands of signers operated by NU and KEEP pledgers. In addition, NU holders can provide liquidity for the insurance pool as a new way to earn income.
If tBTC v2 can successfully challenge wBTC’s monopoly position and truly bring permission-free digital gold to DeFi, NU and KEEP pledgers will become key figures in the DeFi field, and the new income stream will naturally bring spectacular benefits.
Source link: blog.nucypher.com
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