Decentralized Tokenized BTC

[zasad@]

WBTC is a well-known project.
https://wbtc.network/

It contains almost 153,000 BTC. More than 70% of all tokenized BTC are represented by the tokens of this project
https://btconethereum.com/

The project works as a custodian service.
We pass KYC, send our BTC, get ETH WBTC tokens.
There is also a reverse exchange.
Customers' bitcoins are stored in a centralized storage, so you need to trust the custodian.



Alternative decentralized projects

RenBTC
https://renproject.io
19200 BTC is locked in RenBTC. The project ranks 2nd in terms of the number of tokenized BTC.
https://btconethereum.com/

"RenBTC - ERC-20 type token developed by Ren project (former Republic Protocol). renBTC stands on the basement of RenVM - network which enables interoperability between chains. RenVM allows to lock assets on the one chain and issue 1:1 backed assets on another, and wise-versa. It also stated that RenVM is quite secure and is difficult to attack.

RenVM philosophy is based on enabling decentralized custody and it uses the RZL MPC algorithm, which can generate and manage ECDSA private keys without ever exposing them. Darknodes — entities within the ecosystem with 100k+ tokens staked are randomly divided into shards and the shard will generate the secret ECDSA private key.

RenVM uses a different approach there: they implemented algorithmically adjusted fees. How does it work? Each issuing/redeeming of renBTC follows with the fee collected from the user. Fees are dynamically adjusted by the algorithm in response to the demand in that way that the total value of REN bonded by Darknodes should be always greater than the total value of assets locked in RenVM. This model secures Darknodes’ collateral from being liquidated. In addition to this, the bond value is 3x times greater than the maximum locked value (300% of collateralization).

renBTC are created in a process called “lock-and-mint transactions”. They initiated by user who sends the amount of BTC, desired to be exchanged to renBTC, to the renVM. When the custody gets the tokens, it issues the renBTC to the user."
https://medium.com/@manmann/renbtc-vs-tbtc-ed3ef832d0db


1. The user pays BTC to the generated address.
2. The Ren network consists of darknodes that store our BTC and generate RenBTC
To issue RenBTC, a darknode must have Ren tokens on its balance.
The level of collateral is 300%, i.e. each 1 BTC is backed by a collateral of 3 BTC in REN tokens.
The level is quite high, but this limits the issuance of RenBTC tokens.


tBTC
https://keep.network
1387 BTC is locked in tBTC. The project ranks 5th in terms of the number of tokenized BTC.

"We will start with the TBTC is the project developed by Keep Project, Summa, and the Cross-Chain Group. TBTC utilizing the Random Beacon technology developed by Keep, which provides the true randomization of Signers and contributes to the trust-less-ness of the system. Summa provided custom-built interoperability solutions for crypto-companies. The same as RenVM, the TBTC project allows to lock coins on the Bitcoin chain and to issue them on the Ethereum chain.

TBTC follows similar fundamental principles, the project is using decentralized custody as well and using EDCSA signature for managing private keys of the Signers, so no single Signer has access to the funds of the users he secures. TBTC has similar principles as RenVM on the custody side: all the nodes staking 100K+ KEEP tokens could perform as a Signers - entities keeping the deposited BTCs until the depositor claims them back.
Signers in a TBTC project using ETH as collateral and the collateralization ratio is 150%, meaning that for every 1 users’ BTC the Signer keeps he should have 1.5 BTC in the ETH equivalent locked.
If the group of Signers somehow run off with the Bitcoins deposited to their wallet, their ETH bonds will be seized by the system and liquidated, so the end-user will not lose even a penny of his funds.
It is expected, that the project will decrease the collateralization ratio to 135% soon after the launch. The team is also examining new ways to decrease that ratio down to 40%."
https://medium.com/@manmann/renbtc-vs-tbtc-ed3ef832d0db


1.User sends a request to receive tBTC
2. The network randomly selects 3 signers who create a private key. (individually, each of them does not have access to it)
3. The user pays BTC to the generated address and receives tBTC.

Comparison
tBTC uses ETH as collateral. But tBTC has a lower liquidation rate.
These 2 projects are completely decentralized, although the projects accuse each other of violations of decentralization




Sources:
https://medium.com/@manmann/renbtc-vs-tbtc-ed3ef832d0db
https://evandrosaturnino.medium.com/as-maiores-diferenças-entre-renbtc-e-tbtc-b0197f600fb4
https://medium.com/@manmann/cpaвнeниe-tbtc-c-renbtc-5e1d84d044dd
https://blog.keep.network/the-importance-of-randomness-keeps-role-in-tbtc-a20e444d285b

RU:
https://bitcointalk.org/index.php?topic=5288444

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[JeromeTash]

My focus is on WBTC since I am more familiar to it than the others. As far as I know, in order for one to acquire wBTC, they need to first get their KYC documents verified. I don't think KYC and decentralization fit well in one sentence. So long as there is a central authority that controls how one acquires the tokens, then it ceases to be decentralized IMO.

[xenon131]

It seems OP has missed the correct board. wBTC has nothing common with Bitcoin except for the reference  to its name. This token  is based on smart contract of ethereum and compatible to its  native ERC-20 standard. Thereby "Altcoin Disscussion" would be correct place to debate wBTC  if there’s  a story for it.

[zasad@]

My focus is on WBTC since I am more familiar to it than the others. As far as I know, in order for one to acquire wBTC, they need to first get their KYC documents verified. I don't think KYC and decentralization fit well in one sentence. So long as there is a central authority that controls how one acquires the tokens, then it ceases to be decentralized IMO.

I don't mind buying WBTC on a uniswap for trading. But I don't understand the point of buying WBTC from a wbtc.network to trade it on uniswap and other decentralized exchanges.
https://bitcointalk.org/index.php?topic=5276937

I can very easily trade bitcoin on any centralized exchange where I have already passed the KYC procedure.

But I don't want to trust my coins to custodian services, so I can show you a way to trade bitcoin without centralized intermediaries.

[Lordhermes]

I haven't heard of the rest he, tbtc, rentbtc apart from Wbtc which is well known, I think they might have copied it from WETH as well, but what's their purpose in the crypto space. I just got surprise as I saw that these dec tokenised btc are minted 1:1 on ethereum network, that's equally they are same as erc20 tokens.

[Ucy]

I wonder how really decentralized and safe they are. Do the platforms share thesame features (or better) with Bitcoin Blockchain? Do owners of  the BTC-backed tokens run full nodes or something to have thesame benefit of running Bitcoin full nodes and own/control their bitcoins, compared to having them on the platforms custody? Well, I think it's safer and more decentralized to fully own and control your coins by running full nodes. I wouldn't store bitcoins there long-term. I'd prefer to fully benefit from Bitcoin security and other of its important features by fully owning my coin on full node

[kasakola]

I wonder how really decentralized and safe they are. Do the platforms share thesame features (or better) with Bitcoin Blockchain? Do owner of  the BTC-backed tokens run full nodes or something to have thesame benefit of running Bitcoin full nodes and own/control their bitcoins, compared to having them on the platforms custody. Well, I think it's safer and more decentralized to fully own and control your coins by running full nodes. I wouldn't store bitcoins there long-term. I'd prefer to fully benefit from Bitcoin security and other important by fully owning my coin on full node

[\Brother, I support your words because there is a lot of truth in your words, you can learn a lot by reading your posts, Jem you said you will not hold btc or bitcoin like others and you will hold like you so I thank you]

[AhmadM]

But I don't want to trust my coins to custodian services, so I can show you a way to trade bitcoin without centralized intermediaries.

My apologies if my question would be kinda off-topic, I just wondering although both of them tBTC and rentBTC are decentralized services but as far I know the nature of wrapped tokens/tokenized coins is a custodian. So what's the huge difference between using either centralized custodian and decentralized custodian service?

[zasad@]

I haven't heard of the rest he, tbtc, rentbtc apart from Wbtc which is well known, I think they might have copied it from WETH as well, but what's their purpose in the crypto space. I just got surprise as I saw that these dec tokenised btc are minted 1:1 on ethereum network, that's equally they are same as erc20 tokens.

Wbtc tokens are minted according to a very simple principle: you lock your tokens in the bitcoin blockchain, you are given ERC 20 ethereum tokens.
USDT also work.
But when decentralized services use centralized tokens (which can be locked by the owner of a smart contract), it looks very funny.
Any user who trades on a centralized crypto exchange will tell us that this is the same.

[disconnectme]

People need to stop deceiving themselves with this, Decentralized this, Decentralized that, those BTC on Ethereum are not Decentralised in any way, RENBTC is not, the team controls the Bitcoin. Good you can tokenise BTC which I have no issue with, but to claim Decentralised, is BTC in its original form not Decentralised enough

[FinneysTrueVision]

I think it was WBTC that recently got locked inside a DeFi smart contract and the custodian, which is BitGo, has so far refused to help investors recover their funds. If it is a centralized token it should be very simple to refund them but this is the problem with trusting third parties with your Bitcoin. Even if you choose a tokenized version of BTC that is more decentralized you still do not own the keys and you are at risk of losing your Bitcoin.

[Coin-1]

I just wondering although both of them tBTC and rentBTC are decentralized services but as far I know the nature of wrapped tokens/tokenized coins is a custodian. So what's the huge difference between using either centralized custodian and decentralized custodian service?

I think a decentralized custodian means that users do not send their bitcoins to the third party that has full control over the funds. Traders negotiate in advance about all the parameters of the deal. After that they only use the cross-chain platform to confirm transactions.

I tested RenVM (Republic) Network over a year ago. As far as I remember, I sent some bitcoins to the RenBridge integrator and paid fees, so I assume they were using a centralized custodian who needed to be trusted but I'm not sure. I have never heard of tBTC and have not tested the Keep Network yet. Wrapped BTC is similar to Tether but is pegged to Bitcoin, not the US Dollar.

[zasad@]

But I don't want to trust my coins to custodian services, so I can show you a way to trade bitcoin without centralized intermediaries.

My apologies if my question would be kinda off-topic, I just wondering although both of them tBTC and rentBTC are decentralized services but as far I know the nature of wrapped tokens/tokenized coins is a custodian. So what's the huge difference between using either centralized custodian and decentralized custodian service?

Decentralized storage services run on smart contracts. tBTC uses Ethereum for collateral. Even if 3 random signers turn out to be scammers and steal your bitcoins, they will have to give the project their locked ethereum. In practice, the user will not notice this. In a decentralized service, each party to the transaction receives benefits: the client receives a decentralized exchange, the service and the owners of the nodes or are signed receive commissions.
Fraud and abuse of authority will not work here.
Of course, there are risks of mistakes in a smart contract.
read this
https://bitcointalk.org/index.php?topic=5173370.0

[amishmanish]

All of these services are actually custodian services and are always going to have a central, middle party involved. The reason being that there is not yet a decentralized solution to implementing a two-way peg. Even the solution from blockstream, the Liquid sidechain has something called a federated peg. The funds are held in a multisig and the transfer is to parties in a "federation".

In the hype of DeFi, there is a German project that will actually let you BURN your BTC and in return you get their version of ERC-20 BTC pegged to these other custodial BTCs and some other ERC-20 tokens.

[zasad@]

All of these services are actually custodian services and are always going to have a central, middle party involved. The reason being that there is not yet a decentralized solution to implementing a two-way peg. Even the solution from blockstream, the Liquid sidechain has something called a federated peg. The funds are held in a multisig and the transfer is to parties in a "federation".

In the hype of DeFi, there is a German project that will actually let you BURN your BTC and in return you get their version of ERC-20 BTC pegged to these other custodial BTCs and some other ERC-20 tokens.

I disagree with you. Only signers or nodes owners own parts of users' private keys.
The project itself only owns collateral assets, so that in case of fraud from signers or nodes owners, exchange these assets for bitcoins.
The best solution I think is the DAI token. But I can only agree that these solutions will not be the best for storing bitcoins, but they are suitable for decentralized trading.