Wrapped Bitcoin (WBTC) Keeps its Date, now Live on Ethereum
On January 30, 2019, Wrapped Bitcoin (WBTC) went live on Ethereum blockchain as scheduled. This is a Bitcoin backed ERC20 token aimed at bringing Bitcoin and other cryptocurrencies to the Ethereum mainnet. The community-driven initiative is anticipated to bring in liquidity to the DEX, DeFi sectors. WBTC was launched on October 26, 2018, as a joint venture between BitGo, Kyber Network, and Republic Protocol.
A Joint Association of Kyber, Bitgo, Ren
Kyber’s on-chain liquidity protocol allows decentralized token swaps to be integrated into any application, enabling value exchange to be performed seamlessly between all parties in the ecosystem.
Ren is an ecosystem that is anticipated to enable a world of privacy-preserving applications. Ren is basically an open-source decentralized dark pool exchange that facilitates cross-chain atomic trades on a hidden order book over the Ethereum and Bitcoin networks.
BitGo is a leader in security, compliance, and custodial solutions for blockchain-based currencies.
A Decentralized Autonomous Organization (DAO) would be formed specifically for this project. This DAO will serve to perform on chain auditing of WBTC to make sure it is always backed at a 1-to-1 ratio with Bitcoin.
This means that for each WBTC minted into existence, there should be an equivalent amount of Bitcoin held in custody in a 1:1 ratio, making it a fully backed asset.
The launch partners of WBTC include many well-known decentralized exchanges (DEXs) and financial projects like Airswap, bZx, DDEX, Hydrogen, Set Protocol, Compound, Maker, Dharma, Prycto, IDEX, Gnosis, Radar Relay and Blockfolio.
Greater Liquidity, Transparency
The advent of WBTC offers the best of both worlds – the liquidity and widespread adoption of Bitcoin, and the extensive smart contract developer ecosystem of Ethereum.
WBTC is anticipated to bring greater liquidity to the Ethereum ecosystem including decentralized exchanges (DEX) and financial applications and improve all decentralized apps.
Meanwhile, Bitcoin usage is expected to be expanded by facilitating more decentralized use cases. This includes trading Bitcoin on decentralized exchanges, loans, and token payments etc.
Kyber Network co-founder and CEO Loi Luu explains WBTC best:
“This initiative will help applications on Ethereum to use Bitcoin seamlessly, creating bitcoin trading pairs which have been impossible until now. The usage of Bitcoin will be expanded by having more decentralized use cases, such as exchange, loans, token payments.”
Another important feature is that all WBTC issued will be completely backed and verifiable on-chain, making it completely transparent.
The Future of WBTC
Although WBTC is still in its initial stages, it is already building up quite a hype similar to that of security tokens, stable coins, and utility tokens had previously done. As of now, the orderbook, wherein all minting and burning of WBTC is recorded, shows that the supply is already at 65.4216 BTC (equal to $223,758.95).
Eric Wall summed the event up with the tweet, “Big day in crypto. Ethereum is now officially a Bitcoin sidechain.”