Hey yo, what is going on with the viewers of the tuuuuubeeee.
My name is Tyler and I would like to introduce you to the channel that brings the content
smack dab right in your face, whether you like it or not….you know our pearl necklace,
it’s time for Chico Crypto!
What type of content are the members of the Chico Army craving today?
You want something about Bitcoin?
How about something with Defi?
Well, if you want both, you are gonna be happy, because that is exactly what we are talking
about today, bringing Bitcoin to the DeFi ecosystem of Ethereum.
So if you couldn’t tell….the decentralized finance, DEFI, ecosystem is being completely
taken over by Ethereum.
Every single DeFi protocol or dapp that is worth a dam is built on Ethereum using second
layer tech and erc tokens.
You had, a flurry of the shatcoins try to take the DeFi hype, likkkkeeeee Binance, who
cannot be considered defi, as it doesn’t have smart contracts nor is it decentralized,
Binance controls all validators nodes on the Binance chain.
So, all that hype regarding the big ole Binance DeFi IEO, Bidao...the algorithmic stablecoin
competitor to Maker and Dai, it’s not DeFi, it’s not gonna work, because Binance chain
can't handle complex smart contracts.
So don’t believe their BS, don’t believe any of the Ethereum competitors bulloney.
It’s a fugazi, it’s fake, and it’s made to take money from your pocket and put it
into theirs.
But Ethereum will be the gravity well, that brings in all other assets into its’ DeFi
ecosystem, and that includes Bitcoin.
So what are the top projects, who are attempting to bring the liquidity of BTC to Ethereum?
Well there are actually 4 projects we need to discuss.
#1 we have WBTC, or wrapped bitcoin, and this is launched right now in collaboration with
some of the top DeFi projects in the space.
Although WBTC, is a centralized custodian model, with KYC to get the tokens minted,
when they are minted, your collateral BITCOIN is held by a centralized custodian.
So that is not decentralized, but it was a way to bring bitcoin to DeFi, before the tech
was built.
And since the launch of WBTC, we have seen solid growth.
First tokens were minted at the end of January of 2019, and after a year and 3 months, we
have broken 1000 wBTC minted, which means over 1000 BTC are locked by custodians with
contracts.
Now that is just over 7.6 million dollars, and you would think, heyyyy that is not crazy
growth, but when you compare it with Bitcoin’s lightning network, which has been out for
a year longer, since January 2018….you realize WBTC has already outgrew the lightning network.
Now, I know for a fact, the growth of wBTC would be a whole hell of a lot more, if it
was fully decentralized and removed all the barriers of KYC, custodianship, and the pains
that go along with it.
And this is where projects #2, 3 and 4 come in.
Those that are bringing bitcoin to Ethereum in a trustless way.
These projects are REN, tBTC, and ptokens.
So let’s begin 1st with the project who has an actual Bitcoin on Ethereum product
out on the mainnet.
And that is pTokens, they got their Bitcoin product out on the mainnet, about a month
ago, March 5th.
Now ptokens make use of 3 main components #1 A Pay to script has Bitcoin address #2
An Ethereum ERC-777 smart contract and #3 Two light clients (Bitcoin + Ethereum) housed
within an enclave.
This combination allows Bitcon to be quickly and instantly pegged in and pegged out, while
something like wrapped bitcoin, takes some time due to the custodian model.
This automated minting and redeeming of pBTC allows users to enter and exit the market
continuously with less effort than wBTC.
Sooooo how many pBTC were created this month?
Well going to the dapp dashboard for ptokens, we can see just over 7.6 pBTC have been created
from a series of transactions since launch.
Not outstanding…..I wonder why?
Well it’s not fully decentralized….yet.
from their medium post about the launch on the mainnet, in the section on community governance.
Over time, the administration of the system will become more decentralized and its governance
passed into the hands of the community….they then explain, this Phase 0 mainnet launch,
“During this phase, the system is not on autopilot” and finally “This initial,
not fully decentralized version aims to first create a secure and stable system, whose governance
will then become incrementally decentralized”
So ptokens, better than wBTC, but not fully trustless bridge everybody is looking for.
So only two projects left, REN and tBTC.
And this is where the battle for Bitcoin on Ethereum supremacy is going to go down.
So let’s begin with the REN protocol and the RENvm, or virtual machine, which can be
considered the trustless custodian, which manages the ledger of assets as 1:1 across
bitcoin and ethereum.
So how does the RENvm work?
The RenVM stores BTC in a network of decentralized nodes called Darknodes, where all Darknodes
must be collateralized with 3x the value to ensure economic security.
The collateral asset of the dark nodes is REN.
Which means the amount of renBTC available for minting is entirely limited by the available
economic bandwidth of REN which is about 45 million as of yesterday.
Which if we took bitcoin price, of 7300, would mean as of today, REN could MAX mint just
over 6100 renBTC.
Some say, this economic design will run into scaling problems, as it’s not enough economic
bandwidth to support even 5 percent of the Bitcoin market...but there may be a positive
feedback loop here.
The more renBTC minted/burned, the greater Darknodes' revenues and thus the higher value
of REN tokens.
RenVM's capacity is directly tied to usage of RenVM.
More usage, higher REN price, more economic capacity.
So how close is this to being released?
Well just a couple weeks back in late March, we got an update, in which they laid out the
final steps for launch of Mainnet Subzero...and then, they gave the results of their security
audit, which began in January.
No critical bugs, but like all audits some issues found, and now they are moving to the
next phase of the audit, for the sPMC, secure multiparty computation audit, in which Looon
Wang, CEO says “this audit has an unknown time frame, as auditing such an algorithm
is no simple endeavor, nor is fixing any issues that might arise.
With that said, we look forward to receiving those results and will be rolling out RenVM
in lock-step with these reports to ensure a prudent release.
Until the Hyperdrive fixes are enacted, and the sMPC audit is complete, we will not progress
to the third stage of the rollout plan...the official release of Mainnet SubZero).
We will not rush this release as the safety, liveliness, and security of RenVM is our utmost
priority.
So I wouldn’t say, within the next quarter, maybe by quarter 3, but most likely quarter
4.
So for a fully trustless bitcoin on Ethereum we gotta wait, but do we really have to wait
until the end of this year?
Nope, a fully trustless bitcoin is coming soon.
This month, From the last project.
tBTC.
They put out this blogpost, that tBTC will launch on the Ethereum mainnet on April 27th,
where users will have full functionality, depositing BTC, minting tBTC, and using it
in Ethereum, in a fully trustless manner.
So how does tBTC work??
Well there are three major players with tBTC the depositor, the signers, and the signing
groups.
Similar to other protocols, a depositor who wants tBTC to use, a signer is a person who
want to be paid for providing signer custodian services, and a signing group is a decentralized
group of singers who receive the deposits, mint and burn tBTC, and they release of BTC
back to the depositor.
Now I could go into the technical details of signer groups, but the details we should
be worried about is collateralization, as Signer groups could collude together to take
the BTC right?
Well to become a signer, you must deposit Ether into an ETH BOND, which can be taken
away for bad behavior.
So this means the design behind tBTC relies on over-collateralizing Ether to secure every
tBTC on the network.
And the proposed amount is 150 percent, which means for every bitcoin, which is 7300 dollars
as of yesterday, 10,950 dollars needs to be locked as Ether collateral by the signers.
So again this one runs into the same theoretical problem as REN, ethereum doesn’t have enough
economic bandwidth to handle full load of Bitcoin.
I mean at just 5 percent of Bitcoin supply, you would need over 10 billion Ethereum, which
is over 55 percent of the available economic bandwidth at current prices.
But once again, if tBTC succeeds, and people rush to use it, the more locked ethereum reducing
the supply, and you would think that would raise the price of Ether right?
So in my opinion, the trustless Ether to BTC bridge, is going to be one of the most important
pieces to the future of DeFi.
It’s a way for Bitcoin to break away from the shackles of centralized exchanges, Tether
and more, and really use that liquidity, like it meant to be used….trustlessley.
Cheers viewers I’ll see you next time!