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tBTC, a Bitcoin-pegged token on Ethereum, has begun its launch with MakerDAO and Compound support

Quick Take

  • Bitcoin-pegged ERC-20 token tBTC has begun its two-week launch process, releasing the network’s platform token KEEP and some important smart contracts
  • The project will roll out the remaining protocol infrastructure in the following weeks, and starting May 11 anyone will be able to place limited deposits 
  • MakerDAO, Compound, Uniswap, and a number of other projects have all signaled willingness to partner with tBTC as it launches
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tBTC, an Ethereum-based token pegged to bitcoin, has begun its public launch. Over the next two weeks, the project will roll out its technical infrastructure with the support of over 40 crypto projects, including MakerDAO, Compound, and Uniswap.

The ERC-20 token is fully collateralized by bitcoin, meaning its supply is pegged to bitcoin's supply. The protocol is the product of a collaboration between Keep Network, an Ethereum-based system for privately storing data off-chain, and Summa, which provides tools for cross-chain communication. 

On Monday, tBTC's developers launched the network's platform token, called KEEP, which is required to play the role of a "signer." Signers create and control smart contracts that take in bitcoin deposits and mint tBTC tokens. The team also released the smart contracts required for holding and staking assets. 

As of now, signers will consist of project partners, employees, affiliates, and private purchasers like A16z and Polychain. According to tBTC project lead Matt Luongo, around 80 to 100 stakers will be ready to sign at tBTC's launch. In June, Keep will host a stakedrop event, through which anyone will be able to stake ETH to receive Keep tokens and become the protocol's signers.

Next week, the project will deploy the dashboard for the tBTC DApp and the remaining infrastructure. 

On May 11, the whole tBTC system will be ready for public use. Anyone will be able to deposit limited funds into the DApp, although Luongo told The Block that users should "take it slow" since it will still be a new system.

There are a number of other projects – including Wrapped Bitcoin (WBTC), ImToken's imBTC, Synthetix's sBTC – that try to bring Bitcoin liquidity to Ethereum. Each of these tokens allows bitcoin holders to access decentralized finance (DeFi) services through the Ethereum blockchain. What makes tBTC unique, however, is its clear path for redemption, which makes it relatively easy for users to get their bitcoins back if they want to. 

With tBTC, users can go to the tBTC DApp, generate a bitcoin wallet address, deposit their bitcoin into that address, and the get a minted tBTC token in their Ethereum wallet. If they want their bitcoin back, they can redeem it on the DApp and send the bitcoin to their selected wallet address.

According to a statement to The Block, Compound and MakerDAO are both set to list tBTC on their platforms. 

Luongo said that Compound has already integrated with tBTC on Ethereum test network Ropsten. He hopes that users will someday be able to take out USD loans with tBTC collateral using the lending protocol, but he also acknowledged that this will ultimately be up to Compound.

Indeed, Compound CEO Robert Leshner previously told The Block that they need to more accurately assess tBTC's liquidity and security after observing the token's mainnet performance before deciding whether it can become a collateral option.

The MakerDAO community, meanwhile, voted last week to whitelist tBTC and approve its ETH/BTC price oracle, meaning that Maker will maintain the price feed for tBTC. Maker also plans to eventually allow users to use tBTC to mint DAI stablecoin, according to Luongo. He said that the approval of the price feed is "a huge step forward" toward bringing bitcoin collateral to MakerDAO. 

"The Maker team has been an excellent resource building tBTC, and we're pleased MKR holders just voted to deploy an ETH/BTC price feed to power tBTC," said Luongo. "The inclusion of tBTC as collateral will be subject to a vote by MKR holders. Once they do that, we'll be off to the races."

Besides MakerDao and Compound, tBTC's launch partners also include Uniswap, OasisDEX, Balancer, Kyber, Wyre, 1inch, and a number of other prominent projects.


© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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