Monday, September 25, 2023
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Threshold Network launches a trust-minimized bitcoin bridge

Illustrated by Aida Amell/Axios

Threshold Network has announced plans for a new decentralized Bitcoin bridge to Ethereum. This will allow the original cryptocurrency to be used on the largest programmable blockchain.

Important reasons: As the oldest and most valuable cryptocurrency holder, many Bitcoin investors want to use it to earn yields in decentralized finance (DeFi), which is not possible with the Bitcoin blockchain. . But we also want to avoid the counterparty risk of trusting a single company to offer Bitcoin derivatives that run on Ethereum.

News promotion: Bitcoin can only be used in DeFi with any derivative that is a copy of the real Bitcoin secured on the original blockchain for that purpose.

  • one casualties of FTX failure Renn ProtocolThis is one of the unreliable ways of bridging Bitcoin to other blockchains.
  • Before FTX collapsed, Ren had over 4,000 BTC. A little over 400 now.

note: Most Bitcoins that are bridged to other blockchains come in the form of Wrapped Bitcoins (WBTC). 176,547 BTC ($4 billion) is bridged using a fully trusted system created by custody company BitGo.

What they say: “Bitcoin is the most pristine digital asset and if you want Bitcoin to be a productive yielding asset, you don’t have to send it to an opaque liquidity provider,” said the interview.

  • The threshold protocol is merger Between the open source protocol created by NuCypher and the Keep Network.

What we see: threshold We have launched a new version of tBTC. This is a more decentralized approach to bridging Bitcoin from the original blockchain to Ethereum (with others to come, for now).

Usage: the guardian is staker Threshold’s token T, which manages a set of Bitcoin wallets that can be used to create tBTC on Ethereum.

  • Users send their bitcoins to the wallet and specify the Ethereum address where tBTC should be created.
  • If 51 or more of the 100 guardians approve the mint, it will be passed to the mints to mint tBTC corresponding to the actual deposited bitcoins.

  • Minter A small group of talented DAOs (Decentralized Autonomous Organizations) on the Ethereum blockchain, including Curve DAO, Yearn.Finance, Aave, Synthetix, Connext, Alchemix, and Euler.
  • They maintain a 3-hour cooling period between mints and tBTC issuance. If there is no problem, approve the creation of tBTC.

main threat Miners are watching mints that have no matching Bitcoins in their threshold wallets.

  • The system is designed to prevent such malicious mints, but we use minters initially as a safety net. Ultimately, we plan to eliminate this backstop.

What’s next: Bitcoin-backed stablecoin called thUSD.

Be smart: This new version is not trustless. Minimized trust. By creating a large amount of minters, it becomes very difficult (though not theoretically impossible) to abuse minting power.

Flashback: The original version of tBTC has been launched 2020We had no major problems, but capital inefficiencies were holding us back.

  • tBTC market cap has reached millions since mid-2022.

To the point: Matt Luongo, founder of Keep and contributor to Threshold, said: “Without a viable alternative in the market, we are wasting our time trying to meet the urgent demand for a decentralized Bitcoin-to-Ethereum bridge. I don’t have time.


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