In a partnership between a ‘community of launch partners’, Bitgo will be “introducing wrapped Bitcoin, the first ERC20 token backed 1:1 with BTC- with full proof of reserve”.
The wrapped name for the token relates to a similar product called ‘wrapped’ ether. The wrapping relates to the process where the ether is deployed through a smart contract into a 1:1 pegged ERC20 token. Ether is commonly wrapped today to be used amongst decentralised exchanges and other dApps.
Today, in partnership with @KyberNetwork, @republicorg, and our community of launch partners, we're introducing Wrapped Bitcoin, the first ERC20 token backed 1:1 with #BTC – with full proof of reserve. CTO @bencxr explains: https://t.co/dlpQAzigQq #wbtc $wbtc #wrappedbitcoin pic.twitter.com/bgqxrFJ7Eh
— BitGo (@BitGo) October 26, 2018
A new consortium of members
BitGo will provide custody of the Bitcoin and tokenize it by minting WBTC together with approval from community members. “It’s an exciting opportunity for us to build on our mission: making digital currencies usable for business”
The approach to use approvals from ‘community members’ is an interesting one. It draws some parallels to the liquid sidechain implementation by Blockstream (Coin Rivet has previously covered the story of the liquid launch and 1:1 peg between LTBC and BTC).
BitGo announced in a press release that “every Bitcoin will be accounted for on a dashboard displaying addresses and balances, and users will be able to verify on the blockchain each Bitcoin that is held in custody. This can be done by comparing the exact number of Bitcoin stored with the total supply of WBTC in circulation via a blockchain explorer like Etherscan”.
Not the only ‘Bitcoin on Ethereum’
Another project that is due to launch Bitcoin as an ERC-20 contract on Ethereum, is called Bitcoin HEX. This will airdrop Bitcoin holders a Bitcoin Hex as an ERC-20 at a 1:1 rate (via a process of claiming unspent UTXO Bitcoin sets).
The project also has a list of incentives for earlier claimers including the ability to stake and claim a share of unclaimed Bitcoin HEX at a rate of around 2% a week – So all unclaimed Hex will be distributed in around 50 weeks.
When the founder of the project, Richard Heart, was asked about it his thoughts on WBTC, he claimed that “it is not trustless and functions entirely with the use of a central bank (of BitGo). BitcoinHEX is trustless.”
He went on to defend the trustless claim of Bitcoin HEX, saying “BitGo, acts as custodian of the BTC”.
Who is supporting WBTC?
The leading use cases will launch in early January, powered by decentralised projects including Kyber Network, Republic Protocol, MakerDAO, Dharma, Airswap, IDEX, Compound, DDEX, Hydro Protocol, Set Protocol, Prycto, RadarRelay, and Gnosis.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.