This week’s top story — WBTC goes live
Read the full weekly crypto recap here.
Wrapped BTC (WBTC) went live on the Ethereum mainnet on January 30, 2019. WBTC is an ERC-20 token backed by an equivalent amount of bitcoin reserves, held in a cold storage vault. WBTC has a similar design to fiat backed coins and its BTC reserves can also be verified on-chain. WBTC was announced and jointly created by BitGo (the custodian that holds the reserves), Kyber Network (decentralized exchange) and REN (decentralized dark pool).
The motivation behind WBTC was to bring Bitcoin’s liquidity to Ethereum-based DEXs and financial dApps and make it easy for wallets, exchanges, and payment services providers to access BTC without connecting to two separate blockchains.
In order to receive WBTC, users must undergo a KYC/AML process performed by a “merchant”. The user then sends BTC to the merchant, who sends the BTC to the custodian, who sends the equivalent amount of WBTC to the Wrapped Token Contract, which the merchant finally sends to the user.
The merchant initiates the minting (creation) and burning (redemption) process and the custodian (BitGo) performs the function. BitGo also holds the equivalent amount of BTC backing WBTC in circulation in cold storage.
In WBTC jargon, “merchants” are entities that initiate the process of minting and burning tokens. Starting off, the eight “merchants” that will be able to perform this function consist of Airswap, Dharma, Ethfinex, GOPAX, Kyber Network, Prycto, REN, and Set Protocol.
According to the official website, the WBTC project currently has 26 total community members (many of which are in Ethereum’s “open finance” ecosystem). There is also a WBTC DAO that will govern WBTC membership via a multi-signature contract. At the time of writing, 72 WBTC (worth ~$250K at the time of writing) has been minted.
Read the full weekly crypto recap here.
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