How to Mint Trustless Bitcoin tBTC on Ethereum
Editor's Note: This article comes fromEthereum enthusiasts (ID: ethfans)Editor's Note: This article comes from
Ethereum enthusiasts (ID: ethfans)
Ethereum enthusiasts (ID: ethfans)
, Author: Carolyn Reckhow, Translator & Proofreader: Elisa & Min Min, reproduced by Odaily with authorization.
Because BTC has many uses in the DeFi world, the demand for Bitcoin in the Ethereum ecosystem is also growing. Given the decentralized and trustless requirements of crypto-finance, we need to find ways to securely hold Bitcoin on Ethereum without relying on a centralized third party.
tBTC is one such method. tBTC allows Bitcoin holders to securely access Ethereum applications: Bitcoin holders simply exchange their Bitcoins for tBTC, an ERC20 token backed 1:1 by Bitcoin, on tbtc.network .
Most importantly, tBTC can achieve trust minimization: tBTC uses random beacons to select "signers" who are responsible for holding bitcoins and need to provide 150% of bitcoin's value in ether as collateral. That is, instead of BitGo, Bitcoin holders rely on a decentralized network of participants. In this network, every participant will be honest and trustworthy to safeguard the interests of Bitcoin holders.
At any time, tBTC and Bitcoin can be exchanged between each other without going through an intermediary.
The whole process is simple: bitcoin holders can mint tBTC and track their bitcoins on tbtc.network by completing a few simple steps.
Let's learn how to mint tBTC. Then you can safely use your bitcoins to earn income!
Background on tBTC
The developers of tBTC have worked tirelessly to create an asset that complies with the standards and spirit of DeFi. tBTC is built on the Keep Network, using advanced cryptography technology to allow users to safely and transparently use trust-free Bitcoin on Ethereum.
From a high-level perspective, Keep Network mints tBTC through the following three simple steps.
Receive bitcoins on the bitcoin blockchain
Even better, this process can be reversed just using the same steps.
For example:
In summary, many important factors behind the design of tBTC make it uniquely attractive to DeFi.
For example:
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Security, Transparency and Open Source
That said, we want to ensure that tBTC is completely transparent and secure for all users. This is why tBTC is completely open source and adopts the highest cryptography standards.
Click here to view the code of tBTC and Keep Network at any time.
(Note: tBTC and Keep Network use t-ECDSA elliptic curve algorithm. Binance also currently uses this algorithm. Zcash and Gnosis are building similar technology.)
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group of signers
Another pain point that tBTC aims to solve is removing counterparty risk.
To this end, tBTC employs a "group of signers" system to process transactions without going through a centralized trusted intermediary.
Each group of three signers. Each transaction must be approved by the group of signers to be considered successful. Importantly, signers earn 20 basis points (2%) in fees for every tBTC minted, which is an important mechanism to ensure network participation.
Equally important, there needs to be a mechanism to ensure that the signers are honest and trustworthy and protect the minter's interests.
To address this, tBTC employs Random Beacons: a decentralized random selection tool that selects signers in a cryptographically secure and decentralized manner. Random beacons cannot be manipulated.
The final step in ensuring that signers are honest (and not stealing their bitcoins in custody) is that all signers must put up 150% of the value of their bitcoin deposit in ether as a security deposit. Once the signers try to steal the bitcoins in their custody, they will lose the security deposit and end up with more losses than gains.
How to mint tBTC
Before getting started, make sure you have some ether in your wallet and open the tBTC minting app.
1. Click "Deposit".
2. Connect your Ethereum wallet. We currently support Metamask, Ledger, and Trezor hardware wallets.
3. Select your deposit amount. You can choose between 0.01 BTC and 10 BTC. Once selected, click "Create Address".
4. A transaction will pop up on your wallet interface asking you to confirm. Confirm after checking the transaction (this transaction will help you request a new set of signers). Transaction costs are approximately $60-$100.
5. Similarly, check and receive the next transaction that pops up on your wallet interface, this time the transaction cost will be much lower (this transaction will help you request a BTC address).
6. Once confirmed, you will see a bitcoin address. Send the bitcoin (take 0.1 BTC as an example) that matches the deposit amount you selected in the third step to the bitcoin address.
NOTE: Never use an exchange wallet to send bitcoins.
7. Send the bitcoins corresponding to the deposit amount you choose to the generated bitcoin address. After the transaction is on-chain, you have to wait for 6 bitcoin block confirmations, which takes about 1 hour.
Note: If you don't keep an eye on the block confirmation, don't forget to check the completion of your transaction on the block explorer at the end.
8. Check and confirm the transaction that pops up on your wallet interface. This transaction submits the SPV proof (proving that your Bitcoin transaction was confirmed) onto the Ethereum blockchain.
9. Check and accept the next Ethereum transaction to complete the process and mint tBTC.
10. The minting process of tBTC has been completed. Your Ethereum wallet should have received tBTC.
Congratulations! You have successfully minted tBTC and can access DeFi applications on Ethereum. (On some wallet software) you may need to manually add the token (to see your tBTC balance) - here is the tBTC contract address.
Now, you can freely use tBTC on Ethereum. Although tBTC is still a new thing, it may be integrated into popular DeFi protocols such as Compound and Maker in the future.
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