Threshold Network Goes Online With Wormhole To Link Bitcoin To 20 Blockchains

[ad_1]

Threshold Network is now working with the Wormhole cross-chain token protocol with the goal of enabling easy movement of a tokenized representation of bitcoin (BTC) to around 20 blockchain ecosystems.

Wormhole proposed the onboarding to the Threshold community in mid-April, saying its goal was to help Threshold bitcoin (tBTC) become the dominant representative token of bitcoin in on-chain DeFi ecosystems. This deal won strong community support and was fully approved on April 29 after a governance vote.

tBTC is a Bitcoin-backed token that allows users to access the cross-chain Ethereum and DeFi ecosystem. Each tBTC token is fully backed by 1 bitcoin held in reserve.

Wormhole integration will allow tBTC to transfer to both Ethereum Virtual Machine (EVM) chains, such as Arbitrum, Optimism, and Polygon, and non-EVM chains such as Solana, Aptos, Sui, and Cosmos.

Using bitcoin on other networks previously required users to rely on centralized bridges, increasing the risks for token holders. Bridges are blockchain-based tools that enable the transfer of tokens between different networks, a mechanism that opened up massive security risks and fell victim to billions of dollars in exploits in 2022.

The Wormhole bridging scheme is based on a new method of bridging ERC-20 tokens that enables the efficient deployment of capital to Ethereum sidechains.

Instead of creating wrapped tokens for each chain, which absorb valuable liquidity that could be used elsewhere, tBTC will be minted on Ethereum.

A canonical token, i.e. a token native to an ecosystem rather than wrapped, will then be deployed for each new chain. This way, the supply of tBTC remains intact and the risk is confined to local ecosystems.

Wrapped Bitcoin has always had a centralization risk issue that has prevented strong and safe adoption of BTC in on-chain DeFi, Wormhole Core contributor Robinson Burkey explained in a note to CoinDesk.

The collaboration is also expected to involve the Threshold DAO launching a cross-chain liquidity seed operation with the potential to attract up to 26,000 BTC in deposits, a representative told CoinDesk via Telegram message.

Experienced liquidity providers will inject tBTC liquidity into important ecosystems in exchange for the option to buy approximately $20 million worth of t(T) native Thresholds tokens at spot price or above.

[ad_2]