The first of its kind, Wrapped Bitcoin (WBTC) is a joint effort of its founders that include Kyber Network, BitGo and Republic Protocol. Every founding member including the owner of the idea, introducing bitcoin on ethereum platform, is looking forward to contributing for the project. Kyber Network has explained the efforts and contributions that it will be devoting towards the development of WBTC. Moreover, Kyber Network recently shared its views on the idea and approach on the overall project with BlockPublisher.
Kyber Network will be providing initial liquidity to WBTC in order to ensure that it can be exchanged like any other ERC20 token. Kyber Network has been aiming to provide liquidity on decentralized platforms for quite long. Last year, it saw success in installing liquidity between the platforms of ethereum classic and ethereum. Extending its efforts, Kyber Network aims to introduce decentralized liquidity to tokens, like bitcoin, that are outside of ethereum. TN Lee, a representative of Kyber Network, spoke to BlockPublisher to explain the need of doing so. He said:
Despite Bitcoin being the cryptocurrency with the highest market capitalization and liquidity, so far there is no practical and efficient way to capture its value and make it available natively for smart contract usage. In addition, the majority of Bitcoin trading volume today still takes place on centralized exchanges. Most decentralized exchanges offer only ETH/Token and not BTC/Token trades.
He further stated that token trades and smart contracts could be possible with bitcoin after it is brought to the ethereum platform. He described this scenario with an example.
For example, end users can swap various ERC20 tokens for WBTC on KyberSwap or crypto wallets, and DEXs that are integrated with Kyber can access WBTC liquidity right away. Services that are integrated with Kyber for payments will be able to allow their users to use WBTC as well, for example to purchase NFTs, to use in index funds or as collateral in lending platforms.
While speaking to BlockPublisher, Kyber Network categorized users into 3 different groups that are specifically to be benefitted with WBTC. Traders, institutions and DApps users were the key groups mentioned by Kyber Network.
Previously, decentralized exchanges offered very little liquidity and low trading volume on ERC20 tokens to the traders. Now with WBTC, traders will be provided with more liquidity than before. For institutions, WBTC aims to combine the benefits of bitcoin and ethereum while handling the wrapped cryptocurrency with ethereum nodes only. For DApps users, WBTC will enable the use of bitcoin in smart contracts for funds, prediction markets, token sales etc.
Kyber Network further explained the privileges offered to the bitcoin users with WBTC.
WBTC will unlock more use cases for Bitcoin, as its value can now be used on the Ethereum network. Bitcoin users need not only store Bitcoin or use it as a currency within the Bitcoin network. They can go to merchants like Kyber or Republic Protocol to deposit their BTC, get the (ERC20 standard) WBTC and use it in decentralized exchanges, payments, and applications.
Many of the firsts are expected to be unlocked with the initiative taken by founders of the WBTC. Kyber Network is very bullish of the initiative that uses proof of reserves to ensure the ratio 1:1 between minted WBTC tokens and Bitcoin stored by the custodians. The company, along with other founders and launch partners, looks forward to opening the world of decentralized cases for users with its transparent, open, and community-driven WBTC.