On Thursday, the team behind tBTC – a platform for bringing Bitcoin over to Ethereum in a trustless fashion – announced the closing of a $7.7M investment round led by Paradigm Capital with participation from Fenbushi Capital, Collaborative Fund and others.
It's official: We have closed a $7.7M token sale. Big thank you to @CoinDesk for covering the news, and to our partners like @FEhrsam, @_charlienoyes, and @boshen1011 for the strong continued collaboration.https://t.co/i43oxqAJ5o
— Keep #tBTC (@keep_project) April 2, 2020
The blockchain development studio, Thesis, may be more well-known for its Bitcoin spending and rewards application – Fold. Thesis developers have been heads down building Keep Network – a privacy layer for Ethereum providing a bridge between the world of public blockchains and private data. With that in mind, the first application leveraging Keep Network is tBTC.
While Bitcoin on Ethereum already exists in the form of wBTC, the solution relies on BitGo and others to custody the asset – largely going against the core ethos of DeFi and trustless finance at large. By relying on centralized institutions for wBTC liquidity, it limits the potential for the asset given its permissioned and trusted nature. Therefore, while wBTC is continuing to see adoption, many believe BTC in DeFi hasn’t reached its fulled potential given its limitations.
With that – tBTC brings a trustless and permissionless mechanism for bringing Bitcoin over to Ethereum and DeFi. It brings a new, alternative form of trustless economic bandwidth for Ethereum’s money protocols. An important concept to understand when looking at the big picture.
A Background on tBTC
As a simplified summary on how tBTC works: BTC is deposited into a multi-sig wallet on Bitcoin where keys are held privately across several nodes on the Keep Network.
Keep Network node operators are incentivized to act accordingly as they must stake KEEP tokens to operate the node. The chosen nodes collateralized the users BTC with ETH at a 150% collateralization ratio on Ethereum. Once this is confirmed on-chain, the TBTC smart contract mints the user with a 1:1 equivalent of BTC on Ethereum.
The fundraising announcement along with recently open-sourcing the code last week indicates the upcoming launch for tBTC. According to a report done by CoinDesk, Matt Luongo – Keep Network Founder and CEO – stated that both Keep Network and tBTC will go live at the same time within a matter of weeks.
After months of flirting, it's time to make Bitcoin and Ethereum kiss 🥰 @bloomberg's all over it – check out this piece by @mattleising on what bringing Bitcoin to Ethereum might mean for both chains and communities. #tBTC goes live on April 27th.https://t.co/FWmducVHaj
— Matt Luongo (@mhluongo) April 2, 2020
With this new form of trustless economic bandwidth coming online for DeFi, we can imagine that many applications and protocols will begin to integrate the asset as it looks for alternatives to ETH. Given tBTC is the first application for Keep Network, the $7.7M in new capital will help the founding team bootstrap the network, tBTC liquidity, and other intiatives to garner adoption for the asset and network at large.
We can envision that as tBTC becomes more liquid in the coming future, the DeFi community will integrate the asset into a range of DeFi applications and protocols. It’s entirely possible to imagine a scenario where Maker elects to support tBTC as trustless collateral for its leading crypto-native stablecoin, Dai or Compound to replace its wBTC lending market with tBTC instead.
While tBTC has a promising design and the new inflow of capital is another positive signal, there are also other teams aiming to bring BTC over to DeFi in a trustless fashion – such as Ren Protocol and pTokens.
That in mind, we should expect that the “trustless BTC on DeFi” space will begin to heat up in the coming months as all of these solutions come online and begin to compete for adoption within the DeFi community.
🎉 @mhluongo’s episode on Pomp is now available. Matt and @APompliano discuss the upcoming launch of #tBTC, shipping during the time of #Covid_19, and letting $BTC holders start earning trustlessly with #DeFi.
👂Listen here! https://t.co/1Wes6K3AVZ
— Keep #tBTC (@keep_project) March 30, 2020
Until next time!
Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.