Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc), Author: Helen, published with permission.

Babbitt Information (ID: bitcoin8btc)

wBTC

Babbitt Information (ID: bitcoin8btc)

, Author: Helen, published with permission.

It is expected that in the early morning of May 12, Bitcoin will usher in the third halving in history. At about the same time, tBTC, a cross-chain protocol based on the Ethereum network and anchored to Bitcoin, will also be launched on the main network. In order to introduce the value of BTC into the Ethereum ecosystem, many cross-chain Tokens anchored to BTC have appeared in the market, including wBTC, imBTC, sBTC, pBTC, etc. Can you tell them apart? The launch of tBTC has aroused widespread concern and discussion in the encryption community. Why? This article will do a simple science popularization and analysis of these anchored coins.

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wBTC adopts a consortium model where a small number of validators handle the minting, burning and custody of assets. The creation of wBTC is semi-permissioned. If users mint wBTC through merchants and custodians, they must go through KYC/AML, but users do not need KYC/AML to trade and hold wBTC. It encourages users to initiate minting more wBTC in order to achieve an arbitrage transaction between wBTC and the actual price increase of BTC.

imBTC

In other words, wBTC is similar to a mortgage-type stable currency. Users send Bitcoin to the custodian, and then they will get a corresponding amount of wBTC Token, so as to introduce the value of BTC into the Ethereum ecosystem. This means that users need to trust centralized institutions. Of course, BitGo will regularly produce proof of reserves, and its own strength should not be underestimated.

BitGo is a Bitcoin security platform headquartered in Palo Alto established in 2013. The company received $12 million in Series A financing from Redpoint Ventures in 2014. In October 2018, it received Goldman Sachs and former Goldman Sachs partners and billionaires. $58.5 million in Series B funding from Galaxy Digital Ventures, a company founded by Mike Novogratz. It is reported that the company supports more than 75 cryptocurrencies and holds more than $2 billion in assets.

Reminder: wBTC and WBTC (World Bitcoin), a fork currency, are not the same thing, please do not confuse them.

imBTC is a project released by imToken's decentralized exchange Tokenlon. It was launched on the imToken market channel on October 29, 2019, and completed the first round of subscription plan on November 1. The original intention of imToken to incubate this project may be to meet the needs of wallet users for currency exchange. Users can quickly complete currency exchange in Tokenlon without transferring the currency out of the wallet. Tokenlon is based on the 0x protocol. It uses a counter quotation model, just like a Token exchange rate counter. If users are satisfied with Tokenlon's exchange rate quotation, they can accept and complete the exchange.

sBTC

imBTC is an Ethereum Token issued by anchoring BTC at a ratio of 1:1. Holders can freely transfer, redeem, and exchange without identity verification or lock-up period. If you want to get imBTC, just send a BTC transaction. Of course, you can also destroy imBTC through the DApp or call the smart contract, and the BTC will arrive immediately.

When a user purchases imBTC on Tokenlon, the smart contract will deduct 0.3% of imBTC as a transaction fee, and the fee will be accumulated in the smart contract. Users who hold imBTC can initiate a request for dividend distribution, and the smart contract will automatically distribute dividends according to the proportion of imBTC holdings. Holding imBTC can obtain Tokenlon platform income sharing.

The BTC of imBTC is managed by TokenIon. That is to say, you handed over your BTC to a centralized company for custody in exchange for the imBTC certificate, and everyone can weigh the risk by themselves. The supply of imBTC can grow with demand and its creation is permissionless. Of course, the custody address of imBTC will be publicly released, and the minting and burning of imBTC will be tracked through the Proof of Reserve on the chain to ensure the 1:1 correspondence of BTC reserves, which can be audited by anyone. Tokenlon has plans to transform centralized hosting into a DAO (decentralized governance) hosting solution.

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There are 2 roles in the Synthetix ecosystem, stakers and traders. For the pledger, he needs to lock SNX (Synthetix Token) to generate other synthetic Tokens, with a pledge rate of 750%. For example, a staker locks SNX worth $750, which can generate sUSD, sBTC, sETH, etc. worth $100. Why do you do this? Because staking SNX can obtain ecosystem benefits. Synthetix stakers are rewarded whenever a transaction is generated, with a fee rate ranging from 0.3% to 1%.

pBTC

For traders, the process of obtaining sBTC is to destroy the original synthetic assets and generate new synthetic assets. For example, exchanging sUSD for sBTC is actually destroying the sUSD of the user’s wallet address, and determining the exchange rate according to the price provided by the oracle machine. The sBTC is then issued by the smart contract. Traders do not need to pledge, and can directly purchase through platforms such as Uniswap, but the smart contract will charge a transaction fee of 0.3% during the exchange.

Reminder: There is also a fork called SBTC (Super Bitcoin), don’t get confused.

tBTC

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On March 5 this year, the London-based company Provable Things deployed pTokens to the Ethereum mainnet. Users holding Bitcoin can issue pBTC tokens based on the ERC777 standard, and fully interoperate with Bitcoin by integrating Kyber Network and Bancor Network. On April 26, Provable Things announced the release of pBTC on the EOS blockchain, allowing Bitcoin holders to use BTC throughout the EOS ecosystem, including all DApps.

Similar to the several anchored coins mentioned above, pBTC is also anchored 1:1 with Bitcoin, and is centrally managed by Provable Things. The only bright spot of this anchor coin is the introduction of BTC value into the EOS network. There is nothing special about it. The hosting company itself is not very well-known.

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Finally, we come to the high-profile tBTC. tBTC was launched by Thesis, which released the tBTC specification in August 2019, and will launch the mainnet on May 11. After understanding the above-mentioned Bitcoin anchor currency, everyone can understand why tBTC has received attention. tBTC is also an ERC-20 token issued by anchoring BTC, but it is more decentralized.

Thesis is a privacy protocol provider that owns the privacy protocol layer project "Keep Network" and the tBTC protocol, and can also provide users with cross-chain financial services. In 2018, the company received US$12 million in investment from a16z and Polychain Capital. In April this year, it received another US$7.7 million in financing led by Paradigm Capital, Fenbushi Capital and Collaborative Funds.

The decentralization of tBTC is mainly reflected in the non-custodial access mechanism. tBTC has designed a signature group mechanism to realize the minting process. To put it simply, when a "depositor" deposits a certain amount of BTC, he needs to wait for the confirmation of the "signer" and mortgage the corresponding ETH worth 150%. During this process. The system is a randomly selected set of signers, and M of N signatures are required to generate a valid Bitcoin transaction.

Although the industry has high expectations, there are still some factors that may affect the development of tBTC:

Third, the signature fee must be backed by mint, and the deposit must have a predictable useful life. If the value of ETH exceeds the safety threshold, outstanding deposits will enter pre-liquidation and then liquidation. That is to say, fluctuations in the relative prices of BTC and ETH will affect the stability of the collateral mechanism, and the liquidation issue is elaborated in the tBTC white paper.

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Fourth, the oracle machine is always a hidden danger of DeFi. The tBTC 1.0 version uses a semi-centralized price feed and is operated by MakerDAO. MKR holders vote for a set of address management. Keep Network plans to launch a new price feeding mechanism in version 2.0, which will be mainly controlled by the tBTC ecosystem and integrate a new price feeding mechanism based on reverse auction challenges.

In any case, tBTC is currently the most anticipated decentralized solution to introduce BTC into the Ethereum ecosystem, creating new possibilities for DeFi developers. Therefore, it is supported by multiple DeFi platforms including MakerDAO, Compound, Uniswap, etc. Let us look forward to its launch together.

secondary titlesummaryLooking back, history has delivered many answers.