BitGo leads Wrapped Bitcoin (WBTC) initiative to bring Bitcoin and Ethereum together
The Wrapped Bitcoin (WBTC) initiative, led by blockchain asset security company BitGo, Kyber Network, and Republic Protocol organizes with the aim to bring Bitcoin and Ethereum together The WBTC will launch as a fully backed Bitcoin ERC20 token on Ethereum in January 2019.
The initiative aims to bridge Bitcoin liquidity and the decentralized ecosystem on Ethereum, enhancing all decentralized applications. WBTC will allow the Ethereum network to be leveraged, enabling new apps and use cases for Bitcoin.
MakerDAO, Dharma, Airswap, IDEX, Compound, DDEX, Hydro Protocol, Set Protocol, and Prycto have all committed to supporting the adoption of WBTC and will participate as launch members.
“This initiative will be bringing together the liquidity of Bitcoin and the extensive smart contract developer ecosystem of Ethereum,” said Loi Luu, Co-founder, and CEO of Kyber Network. “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, token payments.”
Transparency and Openness
BitGo, a leader in institutional-grade cryptocurrency security, will act as the custodian at launch. The most important feature of this initiative is transparency: all WBTC issued will be fully backed and verifiable on-chain.
To maintain the highest levels of transparency, the project dashboard will have proof-of-reserve showing that every Bitcoin stored by the custodian corresponds to the total outstanding WBTC. Minting will only be possible via the custodian with approval from the merchants, and when WBTC token holders redeem their tokens for Bitcoin, WBTC, in turn, will be burned. All such actions are verifiable on both blockchains, something only available with cryptocurrency.
WBTC will allow any project to include WBTC in their platform without restrictions, while users can easily purchase WBTC tokens on any supported swap service or exchange. The effort will be community driven from launch, with governance dictated through a Decentralized Autonomous Organization (DAO) comprised of reputable projects in the cryptocurrency space.
DAO members will publicly audit the WBTC tokens to make sure that the balances in the custodian wallet and the smart contract match. In addition, they will vote and decide on any proposed improvements. The addition of any new minters, custodians, and DAO members as well as the removal of the existing members will happen via a transparent voting process in the DAO.
This initiative, including the initial minters and DAO, is expected to go live in January 2019. In advance of the launch, the specifications will be made known on GitHub/Gitter for all members of the cryptocurrency community to discuss and propose improvements on both the token and the governance model.
At launch, Kyber and Republic Protocol will pre-mint WBTC tokens from their own Bitcoin inventory to provide initial liquidity and make WBTC available for atomic swaps with users. “The addition of atomic swap technology to the WBTC initiative will allow users to deposit and withdraw BTC/WBTC securely and with confidence, which will assist in enabling WBTC adoption to reach the masses,” said Taiyang Zhang, CEO Republic Protocol.
BitGo will initially be the regulated custodian while WBTC will also be supported in BitGo’s enterprise wallet as well as any exchanges, payment or dapps services using Kyber.
While the initiative initially focuses on Bitcoin, the same approach can be used to bring other major coins to Ethereum. “We are really excited to tokenize the most widely accepted cryptocurrency on Ethereum,” said Benedict Chan, CTO of BitGo, “I think this is a great application of the flexibility and power of blockchains, and it’ll drive greater interoperability and utility throughout the entire ecosystem.”