WBTC (Wrapped Bitcoin), an innovative new token that aims to bridge the gap between the Bitcoin and Ethereum blockchains, launched on Oct 26th as a joint venture between BitGo, Kyber Network and Republic Protocol.
The new bitcoin ERC20 token will bridge the worlds of the two leading cryptoassets in that it will in effect allow bitcoin to be traded against other assets on Ethereum-based DEXs (Decentralized Exchanges), bring liquidity from Bitcoin to Ethereum and allow for a whole new suite of Ethereum-enabled Bitcoin applications.
In a significant departure from other kinds of asset-backed tokens such as USD stablecoins – which have come under fire for their perceived lack of transparency – the project aims to ensure transparency by ‘minting’ and burning the tokens in a way which is publicly verifiable on both the Bitcoin and Ethereum blockchains.
CryptogGlobe spoke with Kyber Network CEO and co-founder Loi Luu about the project, its origins and its potential impact on the crypto economy.
CryptoGlobe: When did the idea for WBTC originate and has BitGo, Kyber and Republic been working on this together since conceptualization?
Loi Luu: Kyber has been exploring solutions to bring Bitcoin and other coins to Ethereum for long time (see our blog posts about PeaceRelay and Bringing Bitcoin to Ethereum). The idea of WBTC came together when we all discussed together with Ben and Tai, and we thought of building a practical solution to offer Bitcoin on Ethereum.
CG: Are Kyber and Republic sourcing all of the initial Bitcoin liquidity for launch – do you have a ballpark figure of the WBTC issued at launch?
LL: We will for sure provide initial liquidity, but we expect other merchants or partners will also do the same. I can’t speak for others, but Kyber side will provide at least 1 Million USD worth of Bitcoin.
CG: After the launch where do you expect to see most demand for WBTC arising?
LL: Decentralized exchanges and other financial protocols like Dharma, Compound finance and index funds.
Would you like more exchanges and custodians to join? For example, Coinbase as they have a DEX product, bitcoin liquidity and a custody solution of sorts, would they be a partner or do you see them as a potential competitor?
WBTC is a community driven project, so we welcome everyone to participate as either merchant, custodian and a DAO member. The initiative is governed by a DAO which comprises of many projects in the space to create one single standard for cross-chain assets that no one owns. As such, we very much hope and expect other projects and companies in the space, including Coinbase and other DEXs, to join the initiative and collaborate together.
CG: Do you think this will elevate the value proposition for Ethereum and Bitcoin?
LL: Absolutely, WBTC helps achieve the best of both worlds: bring the most popular cryptocurrency (in terms of market cap and trade volume) to Ethereum and allow it to be programmable with expressive smart contracts on Ethereum.
CG: Do you feel this will set a precedent of transparency in the crypto/traditional finance worlds, could publicly auditable tokenization models become the standard?
LL: Transparency is what we want to achieve and value very much in WBTC. And yes we would be happy to have everyone to work together on a single standard when it comes to tokenizing other assets. Thats why the whole initiative is designed to be open, and community oriented to welcome such collaboration.