Bitcoin (BTC)

Bitcoin (BTC)

BTC on Minter is a wrapped BTC on the Ethereum network (ERC-20), which is fully backed 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, which is why the vast majority of DeFi runs on the Ethereum blockchain.

The possibilities of DeFi are quite flexible: farming, liquidity provision, lending, etc. Since BTC is the most widely known and highest in total value and usage among institutional investors, a tokenized BTC is a bridge of sorts between traditional crypto investments and DeFi.

How BTC is tokenized and the reverse process

BTC is tokenized by releasing a token of the ERC-20 format — wrapped BTC (wBTC), with a 100% supply in real BTC. You can check out 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 which 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 six confirmations, and after the custodian receives the BTC, they mint and send wBTC through a smart contract to the merchant’s address on 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 parties to this process are the custodian of real BTC and the merchant who completes 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 publicly, and the minting and burning can be checked on the Ethereum blockchain.

Services to trade BTC for wBTC and vice versa

On the official site of the wBTC Network, there’s a Partners section where partner 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 platform for regular BTC, then exchange BTC for WBTC, and then withdraw it to a specified Ethereum wallet address. You can also trade ETH straight against 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 ERC-20 tokens since here, long chains of swaps 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 in your ERC-20 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 token called wBTC, which is a wrapped token of the real BTC. And just like wBTC has a 1:1 correlation with the real BTC, the same goes for the BTC on Minter, which has the same price as wBTC and is fully backed by it (cold wallet, hot wallet). This means that the mirrored 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, and when minting and burning wBTC tokens, some fees will have to be paid. On Ethereum, they’re not cheap.

To minimize fee expenses, wrapped tokens on Minter are released in packets (they won’t exactly be 1:1 accurate with the backing tokens on Ethereum). But only the 100%-backed amount will be allowed to circulate on Minter, the rest will be on the hot and cold wallets, 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 quantity 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 time of 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 circulated on Minter is:

100 000 - 99 900 - 99.05 = 0.95 BTC (rounded to 2 decimal places)

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

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Liquidity pools with BTC

You can view the existing liquidity pools in pairs with BTC on a Minter Explorer page or 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 (or yearly profitability).

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

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BTC cross-chain transfer

You can learn about transferring wBTC and other tokens from Ethereum to Minter and back on 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 low fees ($0.01 per transfer and $0.03 + 0.2% per swap). You can learn about other advantages Minter has on a corresponding page in our database.

© 2021 BTC.Secure Inc.