BTC Backed Stablecoin Launched
A new stablecoin has been launched on the Ethereum Blockchain, however, this one is backed not by a fiat currency but by the world’s number one cryptocurrency, Bitcoin (BTC).
The project is a joint venture between the cryptocurrency exchanges Kyber Network and Republic Protocol, and BitGo, the crypto custody startup. The new stablecoin, called Wrapped BTC with the ticker WBTC, is an ERC-20 token and was launched on Wednesday.
The project was launched in October last year with the aim of bringing more liquidity to Ethereum’s network, as well as to financial institutions and crypto exchanges. At the time that the project was launched, the chief technology officer of BitGo Benedict Chan stated that WBTC had both Bitcoin’s stability as well as Ethereum’s flexibility.
Chan also stated that compared to the dollar, BTC was more volatile. However, the cryptocurrency also was the most liquid as well as stable of all the cryptocurrencies. It also had the highest market capitalization.
Getting WBTC Tokens
WBTC has been listed on CoinMarketCap since early Wednesday evening. And according to the data site, there are now 72.4214 WBTC circulating on the Ethereum network. The new stablecoin is marginally over-collateralized by the number of Bitcoin at 72.4216 BTC, which is currently worth about $250,000. The BTC has been locked into custody on BTC’s Blockchain.
According to WBTC’s team, there are 8 merchants from whom users can convert their BTCs into WBTCs. These are – Dharma, Airswap, GOPAX, ETHfinex, Prycto, Set Protocol, Kyber Network and Ren. The white paper of this project describes these merchants as the parties to whom wrapped tokens will be burnt from and minted to, which means that they will be playing a key role in the liquidation as well as exchange of the WBTC tokens
Users on the Ethereum network can get WBTCs from one of these merchants after they go through the required Anti-Money Laundering (AML) and Know You Customer (KYC) checks.
The technology being used to facilitate this exchange is known as an atomic swap, which helps with cross-chain crypto trades.
Trading WBTC on Exchanges
Besides the 8 merchants, a number of cryptocurrency exchanges have also bought a part of the initial inventory of WBTC tokens, and so will support a real-time supply directly to their respective platforms.
Added to this, some Dapps (decentralized applications) that are financially focused and work on the Ethereum network, such as Compound, bZx and dYdX will allow these tokens to be used immediately.