The number of cross-chain ERC-20 Bitcoins based on Ethereum ushered in a blowout. The total amount of Wrapped BTC (WBTC) locked up has now exceeded $1 billion.
This huge amount of liquidity data flowing from the Bitcoin network into the Ethereum ecosystem is of milestone significance. It shows that BTC holders are interested in participating in the Ethereum ecosystem and joining the many DeFi dApps that have created tremendous value in the past few months.
As WBTC reaches the level of USD 1 billion, it is necessary to talk more about what these ERC-20 versions of BTC are, and to further compare tBTC and renBTC equivalent solutions.
1. WBTC – Wrapped Bitcoin
WBTC is the ERC-20 version of Bitcoin, which aims to make BTC liquidity enter the Etheruem ecosystem. It was originally developed by Kyber Network and BitGo in October 2018 and it was officially launched in January 2019.
It is the first ERC-20 version of BTC, and it is fully supported on a 1:1 basis, because the proof of reserve is on the Bitcoin network, so it can be verified on the blockchain.
- Statistics: With a lock-up volume of USD 1 billion, 95,198 Bitcoins have been locked-
- Since January 2018
- BitGo is the sole custodian of BTC locked in WBTC
- This process is carried out by the custodian and the merchant. Custodian mints WBTC and holds BTC, merchants are responsible for communicating with users and custodians to mint WBTC
- The merchant is responsible for AML/KYC inspection, and then ask the custodian to mint WBTC
- When users request to return BTC, only merchants can destroy WBTC. The encapsulated cross-chain from BTC to WBTC is mainly for large participants, not ordinary traders.
- All BTC are held by the sole custodian BitGo
- BTC can be verified on the chain through its “”
- The entire project is managed by (decentralized autonomous organization)
- BitGOChainlink as the price prediction of WBTC As the first ERC-20 version of Bitcoin, it has been integrated with many DeFI platforms, such as Kyber Network, Airswap, Ren, DDEX, Gnosis, BitGo, Blockfolio, Maker, RadarRelay, DyDx
2. tBTC
tBTC is another ERC-20 token, which is exchanged with BTC in a ratio of 1:1. There is no middleman in tBTC, and there is no need to do KYC/AML procedures. Although it finally launched in September 2020, its plans were much earlier.
- Statistics: With a lock-up amount of $4.5 million USD, 433 Bitcoins have been locked-
- Operating since September 2020
- Users who pledge to obtain tBTC must pledge ETH as a deposit guarantee for the anti-spam mechanism-
- A signature group is automatically selected and a BTC wallet is assigned to the depositor. These signature groups also pledged some ETH, so they are incentivized to ensure normal operation
- If one node in the signature group goes offline, everyone in the group will lose some of their pledged ETH-
- If the user wants to convert from tBTC back to BTC, the signature group is responsible for redeeming BTC
- No AML/KYC required
- Need to provide the price of Ethereum to manage the liquidation
- Only 1 BTC can be minted at a time
- Reviewed by ConsenSys, Trail of Bits and Sergei Delgado
- Partners and decentralized exchanges using tBTC: Uniswap, OasisDEX, Balancer, Kyber Network, Wyre, 1Inch Exchange
3. renBTC
RenBTC is another ERC-20 version of cross-chain BTC. Its virtual machine RenVM can realize cross-chain decentralization and trustless exchange of encrypted currency assets.
- Statistics: $305,8M TVL, 25,300 bitcoins are locked-
- Operating since May 2020
- Can be minted faster than WBTC and tBTC. It can be carried out multiple times per minute at any time, no custodian or manager is required
- RenVM dApp will create an address for users to send BTC, and RenVM will mint RenBTC
- RenVM stores BTC in the network
- Even if a third of the Darknodes are offline, the RenVM system can still operate
- RenVM can be easily integrated into any existing dApp
- Use ECDSA private key to keep data confidential, which can prevent any external entities from preventing users from minting coins or redeeming BTC by burning renBTC
- RenVM also supports BCH and ZEC cross-chain to become ERC-20 tokens
- List of partners who use renBTC; Aave, AirSwap, bZx Protocol, Curve Finance, Kyber full list
- Where to trade: Huobi, Uniswap, Mooniswap, Balancer, Curve Finance, 1Inch Exchange, Sushiswap
in conclusion
On the other hand, some other users may prefer the decentralized version, such as in RenBTC, because they believe that cryptocurrency should be completely decentralized. In this case, the user does not have to trust the custodian, but must trust the smart contract and hope that no hackers will attack it.
Finally, tBTC has yet to be proven. It is the latest version of “Bitcoin on Ethereum”. The most worrying part of their system is that ETH is used as collateral when minting tBTC. With the exposure, this may hinder the development of the tBTC network. But this does not mean that I am not happy for any progress related to this project.
