Wrapped Bitcoin (WBTC)
$9 156.22 (-1.69 %) View coin |
Tezos (XTZ)
$2.78 (-7.45 %) View coin
08 April 2020

Bitcoin-backed token launches on the Tezos blockchain

The Bitcoin Association Switzerland (BSA) announced a group of crypto firms has collectively launched a tokenized version of Bitcoin, tzBTC, on the Tezos blockchain. Similar to Wrapped BTC (WBTC) on Ethereum, each tzBTC is backed by an equivalent amount of Bitcoin. But unlike the process of creating WBTC, which relies solely on crypto custodian BitGo, four different companies (called Keyholders) have the ability to mint and burn tBTC to maintain the 1:1 peg. The BSA serves as a third-party mediator to uphold the integrity of these four Keyholders, creating a more robust, albeit still trusted, checks-and-balances system.

Why it matters: - The introduction could provide a spark to Tezos’ efforts to build out a decentralized finance (DeFi) ecosystem. But the network’s DeFi offerings and uses cases for tzBTC are relatively barren at the moment. As a silver lining, StakerDAO, an app that allows investors to earn yield on various protocols, plans to launch its first product, called Blend, on Tezos at some point this quarter. - Another concern is the actual demand for Bitcoin use in DeFi applications. WBTC accounts for about 1% of the total value locked in Ethereum’s DeFi sector, according to DeFi Pulse. Keep Network, home of the tBTC application, has faced similar skepticism as some believe Bitcoin holders are wary of using novel and relatively untested blockchain-based apps.

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