Bitcoin (BTC)

Bitcoin (BTC)

BTC on Minter is a wrapped BTC on the Ethereum network (ERC20), which is fully supported by the real BTC.

Why would you create tokenized assets?

BTC is most often considered as a catalyst for preservation of traditional assets, also called “digital gold”. But its functionality is quite limited, it’s not programmable, and aside from transactions it doesn’t have any use cases. Ethereum on the other hand is built like a network for creation of decentralized apps, that’s why the vast majority of DeFi works on the Ethereum blockchain.

The possibilities of DeFi are quite flexible: farming, liquidity provision, crediting etc. And since BTC is the most widely known, the highest in total value and usage amongst institutional investors, then a tokenized BTC is a bridge of sorts between traditional crypto investment and DeFi.

How BTC is tokenized and the reverse process

BTC is tokenized by releasing a token of the ERC20 format — wrapped BTC (wBTC), with a 100% supply in real BTC. You can check the open audit of all the storage wallets if you’re not convinced.

Receiving wBTC

In order for a user to receive wBTC in exchange for real BTC, the first thing they must do is pass a mandatory identification check (KYC, AML), after that they can send the request to the merchant. After the procedure is complete an exchange between the user and the merchant will commence, most often with an atomic swap, which represents an exchange with no trust between two coins.

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wBTC minting

The minting of new wBTC tokens is initiated by the merchant, and performed by the custodian. Merchants send BTC to the custodian, wait for 6 confirmations and after the custodian receives the BTC, they mint and send wBTC through a smart contract to the merchant’s address in the Ethereum network.

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Burning wBTC

The burning of wBTC is the reverse process, trading tokenized BTC for real BTC. Only the merchants’ addresses can burn wBTC. The custodian sends BTC to the merchant’s address and waits for 25 confirmations on Ethereum after sending the BTC to the merchant, then confirms the burn on the smart contract’s address. The burned amount is subtracted from the merchant’s address, and the offered wBTC consequentially lowers as well.

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Transparency

The most important piece in this process is the custodian of real BTC, as well as the merchants who complete user requests for exchanges. wBTC is controlled by DAO, which stores keys for a multisig wallet and can make changes to a smart contract to mint or burn tokens. The solutions are accepted in a decentralized way (with multisigs), this guarantees that neither side can solely control the decision making, which makes the process more reliable. Proof of supply in stock is demonstrated publically, and the minting and burning can be checked on the Ethereum blockchain.

Services to trade BTC to wBTC and vice versa

On the official site of wBTC Network there’s a Partners section, where partnering merchants, custodians, exchanges and DAO members are presented. Next to some partners there’s a Get WBTC button.

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Simple, tried and true methods
  • Binance. You can trade any coin on the exchange to regular BTC, and then exchange BTC for WBTC, and when extracting it from the exchange specify an Ethereum wallet address. You can also trade ETH straight for WBTC
  • Badger Bitcoin Bridge. Allows you to exchange BTC for WBTC. You need to connect a wallet and perform an exchange. Make sure you specifically select WBTC, renBTC is set by default.
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  • Uniswap. A decentralized exchange based on Ethereum. You can purchase WBTC for ETH, USDT, USDC, DAI and other ERC20 coins, since here long chains of exchanges are possible, and pretty much every token has a pair with stablecoins.
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  • Сurve. A wide selection of tokens that can be traded for WBTC (these tokens must be on your ERC20 wallet). It’s a decentralized exchange, the trade is accomplished with liquidity pools
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BTC on Minter

On Minter BTC is represented by a wrapped token of wBTC, which itself is a wrapped token of the real BTC. And just how wBTC has a 1:1 correlation with the real BTC, same goes for the BTC on Minter (roaming) being completely accurate to the price of wBTC and is fully supplied by it (cold wallet, hot wallet). This means that the roaming BTC (Minter) is 1:1 accurate to the actual BTC (Bitcoin).

BTC tokens on Minter

BTC hot wallet — Mx68f4839d7f32831b9234f9575f3b95e1afe21a56 BTC cold wallet — Mx7072558b2b91e62dbed78e9a3453e5c9e01fec5e

wBTC tokens on Ethereum (allowing for BTC on Minter) wBTC hot wallet — 0xC735478EF7562ecc37662FC7c5e521eb835F9Dab wBTC cold wallet — 0x58BD8047F441B9D511aEE9c581aEb1caB4FE0b6d

The Ethereum token wBTC and the real BTC are identical to each other and when minting and burning wBTC tokens some fees will have to be paid, and on Ethereum they’re not cheap.

To minimize fee expenses, on Minter wrapped tokens are released in packets (they won’t exactly be 1:1 accurate with the supplying coins on Ethereum). But only the 100% supplied amount will be allowed to roam on Minter, the rest will be on the hot wallet and the cold wallet, which are controlled with multisigs.

It doesn’t affect security and reliability, since minting and burning wrapped tokens on Ethereum is also managed by multisigs and they can be minted or burned at any moment upon reaching a required amount of votes. In this case Minter has an advantage over Ethereum as it doesn’t spend any money at all on fees.

Example

The first packet of BTC tokens on Minter consists of 100 000 BTC.

At the moment or writing the cold wallet has 99 900 BTC.

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...while the hot wallet has 99.05 BTC.

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This means the amount of BTC roaming on Minter is:

100 000 - 99 900 - 99.05 = 0.95 BTC (rounded down to 2 characters after the period)

Meanwhile the hot wallet balance where the wBTC tokens are at, which supply BTC on Minter, contains 0.95 wBTC (rounded down to 2 characters after the period).

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Liquidity pools with BTC

You can view existing liquidity pools in a pair with BTC on a Minter Explorer page or at Chainik.

By clicking on a pair you can see all the basic liquidity information, token price correlation, daily trade volume, daily fee amount received by liquidity providers and the current APY — yearly profitability.

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And on the page of the pair at Chainik you can also track the price change graph.

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BTC cross-chain transfer

You can learn about transferring wBTC and other tokens from Ethereum to Minter and back at our page about cross-chain transfers.

Advantages of BTC on Minter

The advantages of having a wrapped BTC, like other tokens on Minter, lie in the blockchain’s possibilities — first off, the transaction speed (less than 5 seconds) and the low fees ($0.01 for a transfer and $0.03 + 0.2% for a conversion). You can learn about other advantages Minter has at a corresponding page on our database.

© 2021 BTC.Secure Inc.