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!
