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tBTC

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Discover tBTC's fundamentals and latest news.

This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is tBTC?

tBTC (TBTC) is a software that allows bitcoin holders to mint tBTC tokens, which are ERC-20 tokens backed 1-to-1 by BTC. This enables bitcoin holders to access decentralized finance (DeFi) applications on the Ethereum blockchain.

How is tBTC used?

tBTC (TBTC) is a decentralized bridge that allows bitcoin holders to use their bitcoin on the Ethereum blockchain, enabling access to decentralized finance (DeFi) applications. Here's how it works:

  1. Minting tBTC Tokens: Bitcoin holders can mint tBTC tokens, which are ERC-20 tokens backed 1-to-1 by BTC. This allows them to use their bitcoin in Ethereum DeFi applications.

  2. Deposit and Redemption: Users can deposit bitcoin into a wallet, which is secured by threshold cryptography. The deposited bitcoin is then reflected on the Ethereum chain. When users want to redeem their bitcoin, the system releases the equivalent amount of bitcoin to the user's specified address.

  3. DeFi Applications: tBTC tokens can be used in various DeFi applications, such as lending, borrowing, and liquidity mining. This allows bitcoin holders to earn interest, secure loans, and generate revenue without having to sell their bitcoin.

  1. Integration with Exchanges: tBTC is supported by several exchanges, including Kraken and Gemini, where users can deposit and manage their tBTC tokens.

  2. Security Model: tBTC's security model is designed to be highly secure and decentralized, using threshold cryptography to protect deposited bitcoin. This ensures that no single entity controls the bitcoin and that users have full control over their assets.

Overall, tBTC provides a secure and decentralized way for bitcoin holders to access Ethereum DeFi applications without having to sell their bitcoin.

How do I store tBTC?

To store tBTC (TBTC) tokens, you need a compatible external wallet. Gemini, a global cryptocurrency exchange and custodian, provides custody support for tBTC, allowing you to hold and transfer tBTC tokens with a compatible external wallet.

How to buy tBTC?

To buy tBTC (TBTC) tokens, follow these steps:

  1. Choose a Crypto Wallet: Select a reliable crypto wallet that supports tBTC, such as Coinbase Wallet, MetaMask, or TrustWallet. Ensure the wallet is compatible with your preferred payment method and follows your desired policies.

  2. Set Up Your Wallet: Create an account, provide personal information, and set a strong password. Note down your Secret Recovery Phrase or Seed Words carefully for future reference.

  3. Buy Base Currency: Choose a cryptocurrency exchange platform and buy a base currency such as Bitcoin, Ethereum, or Tether. This will be used to trade tBTC.

  1. Transfer Funds to Wallet: Withdraw your base currency to your crypto wallet by providing your wallet address and the amount to transfer.

  2. Select a Decentralized Exchange (DEX): Choose a DEX that supports your wallet, such as Pancake Swap or 1inch. Ensure the exchange supports the wallet you selected.

  3. Connect Wallet to DEX: Connect your wallet to the DEX using your wallet address.

  1. Buy tBTC (TBTC): Select your base currency and tBTC as the coin you want to acquire. Enter the amount you want to trade and complete the transaction.

  2. Check for Smart Contracts: If tBTC is not listed, use bscscan or etherscan to locate the smart contract address and paste it into the DEX to complete the transaction.

Additionally, you can also use centralized exchanges like Kraken, which supports tBTC deposits.

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History of tBTC

The history of tBTC (TBTC) is a significant aspect of its development and evolution. Here are the key points:

  • Early Development: tBTC is the first application of the Keep Network, a trust-minimized bridge between the Bitcoin and Ethereum blockchains. This bridge allows users to access Ethereum DeFi (Decentralized Finance) apps using Bitcoin.

  • Launch Timeline: The alpha version of tBTC, release candidate zero (rc.0), went live on May 15, 2020. This was followed by a 10-day emergency pause of deposits on May 18, 2020. The full mainnet launch occurred on April 27, 2020.

  • Key Features: tBTC uses a system of random signing groups to process transactions. Users can mint tBTC by providing proof of their BTC deposit, which can then be used on the Ethereum blockchain. The project is fully open-sourced, including the code for signers’ groups.

  • Market Performance: As of June 12, 2024, the live tBTC price is $69,160.00 USD with a market cap of $231.05M and a circulating supply of 3.34K coins.

  • Community Engagement: tBTC has been supported by a significant portion of the DeFi market, with 75% of DeFi market participants backing its launch. The project also allows ETH holders to earn fees by becoming tBTC signers.

Overall, tBTC has made significant strides in bridging the gap between Bitcoin and Ethereum, enabling users to access DeFi applications with their Bitcoin holdings.

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How tBTC works

tBTC (TBTC) is a decentralized bridge between Bitcoin and Ethereum that allows users to securely interact with the DeFi ecosystem without relying on centralized intermediaries. Here's a detailed overview of how it works:

Deposit and Redemption Process
  1. Deposit:

    • Users send Bitcoin to a designated wallet address on the Bitcoin network.
    • The wallet is secured by a group of node operators using threshold cryptography, which requires a majority agreement for any actions.
    • The Bitcoin deposit is verified on the Ethereum network, and the user receives an equivalent amount of tBTC tokens, which are ERC-20 tokens backed 1:1 by the deposited Bitcoin.
  2. Redemption:

    • Users can redeem their tBTC tokens for the original Bitcoin at any time.
    • The redemption process involves submitting the tBTC tokens and receiving the corresponding Bitcoin from the secured wallets.
Security Measures
  • Threshold Cryptography: Node operators must agree on actions using threshold cryptography, ensuring that no single operator can control the deposited Bitcoin.
  • Node Operator Rotation: The selection of node operators is rotated weekly to prevent collusion and maintain security.
  • Insurance Backstop: A Coverage Pool acts as a financial safety net in case of security breaches, converting its assets into BTC to maintain the supply peg.
Fees
  • Minting: Currently, there is no fee for minting tBTC tokens.
  • Redemption: The redemption fee is set at 0.2%, which can be adjusted through a governance process.
Governance
  • Threshold DAO: The governance of the Coverage Pool is managed by the Threshold DAO, which supports a decentralized, community-driven approach and allows for strategic asset diversification and incentives for external deposits.
Technical Details
  • tBTC v2: The second generation of tBTC is designed to be highly secure, decentralized, and open-source, enabling users to participate safely in Ethereum DeFi products.
  • Node Operators: Node operators must stake 40,000 T tokens and maintain a minimum of 0.5 ETH to cover transaction fees, aligning their interests with the system’s integrity.

By using tBTC, users can access the DeFi ecosystem without relying on centralized intermediaries, ensuring a high level of security and decentralization.

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tBTC's strengths

tBTC (TBTC) offers several strengths compared to traditional cryptocurrencies and other Bitcoin-pegged tokens:

  1. Trust-Minimized: tBTC is designed to minimize trust by using random number generation, cryptographic proofs, and the KEEP token. This approach ensures that users do not have to rely on intermediaries or custodians, maintaining a high level of security and decentralization.

  2. Decentralized Bridge: tBTC acts as a bridge between Bitcoin and Ethereum, allowing users to access DeFi protocols without relying on centralized custodians. This bridge is highly secure, decentralized, and open-source, ensuring that users can participate safely in Ethereum DeFi opportunities.

  3. Security Model: tBTC's security model involves overcollateralized signers, ensuring that users are fully reimbursed in the event of signer fraud. Additionally, the use of threshold ECDSA protocols and SPV proofs ensures the integrity of transactions.

  1. Permissionless Access: tBTC v2 provides permissionless access to the web3 universe, enabling users to deposit and withdraw BTC seamlessly and securely. This eliminates the need for intermediaries and ensures that users can access DeFi opportunities without restrictions.

  2. High Liquidity: By bringing the value and liquidity of Bitcoin to Ethereum, tBTC expands the scope and strength of the DeFi ecosystem, offering users more opportunities for savings, lending, and investment services.

Overall, tBTC's strengths lie in its decentralized, trust-minimized, and highly secure approach to bridging Bitcoin and Ethereum, providing users with a reliable and permissionless way to access DeFi protocols.

tBTC's risks

tBTC (TBTC) faces several risks, primarily related to its decentralized custody model and the potential for regulatory pushback. Key risks include:

  1. Custody Model Risks: tBTC's custody model is not fully decentralized, relying on a limited number of minters and nodes. This can lead to trust issues and potential manipulation by state actors. If minters are asked to block certain addresses or stop minting, users may not see their BTC again for an extended period.

  2. Regulatory Pushback: tBTC is still in its early stages and may face regulatory challenges. If Threshold Network faces regulatory issues before implementing the "sweeping" feature, which automatically mints tBTC for deposits, the feature may never be enabled.

  3. Signer Fraud: Signer fraud is a significant risk in the tBTC system. If a signer moves Bitcoin without authorization, they can be slashed, and their bond is used to compensate users. However, this relies on the integrity of the price feed and the ability to detect and prove fraud.

  1. Price Feed Risks: The security of the price feed is crucial to the system. A faulty or manipulated price feed can push deposits into liquidation, which can harm signers. Long-term price feed manipulation can threaten the system over time.

  2. Depositor Risks: Users depositing BTC for tBTC are at the mercy of minters and node operators. If minters do not honor deposits or node operators act with malice, users may not recover their BTC.

These risks highlight the importance of ongoing development and improvement in tBTC's security model to ensure the trust and integrity of the system.

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tBTC's ecosystem

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tBTC’s team

  • Thesis: The team behind tBTC, which includes Matt Luongo as the CEO. They are also the developers of the Keep Network, a decentralized multi-party computation that enables cross-chain bridging.

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