Tezos Commons :: From Bitcoin to Tezos with tzBTC 2.0
From Bitcoin to Tezos With tzBTC 2.0
Exploring the upcoming improvements of tzBTC 2.0 and what it means for the Tezos ecosystem.
The Tezos DeFi landscape is rich and diverse, with tzBTC being a significant component. It’s a bridge that brings bitcoin’s liquidity into Tezos, enhancing the ecosystem.
Seeing that the recent announcement for tzBTC 2.0 has raised some questions in the community, I thought it would be worth taking a closer look into what tzBTC is, what the improvements that were announced are, and what they mean. So let’s dive right into it!
What is tzBTC?
The tzBTC token is a wrapped form of bitcoin on Tezos where each tzBTC token is backed on a one-to-one basis with actual BTC. The initiative was spearheaded by the Bitcoin Association Switzerland, working closely with the Tezos Foundation and other key partners such as Woorton, Sygnum, and Taurus.
The primary objective behind the creation of tzBTC was to leverage bitcoin’s substantial market presence and liquidity, integrating it within the Tezos ecosystem to foster a dynamic and expansive DeFi environment.
Since then it has become an important part of the Tezos defi scene and it is widely utilized across various DeFi applications on Tezos, with some platforms, such as Liquidity Baking (a.k.a SIRIUS Dex) and Kord.Fi, being specifically built around it.
tzBTC 2.0: The Improvements
Before we jump into what’s new, let’s get one thing straight: the tzBTC token itself isn’t changing. It’s still the same token and smart contract you know and use. What’s getting a makeover is how you mint and burn tzBTC. Until now, if you wanted to swap BTC for tzBTC or the other way around, you had to go through gatekeepers. These were the entities that did all the necessary KYC (Know Your Customer) and AML (Anti-Money Laundering) checks. But let’s be real, the process could be a bit of a hassle, especially with things like high minimum amounts that didn’t exactly make life easy for the average user.
Enter tzBTC 2.0. Things are about to get a whole lot smoother. By utilizing Acurast, minting and burning tzBTC is going fully autonomous. You’ll be able to handle everything directly on the tzBTC website, and here’s the cherry on top: the Tezos Foundation is covering the costs, so you won’t have to pay any fees (well, except for the network fees which on Tezos are tiny). It’s important to note, however, that KYC procedures will remain in place to ensure compliance with regulatory standards and to facilitate broader institutional acceptance. According to the announcement, these changes are planned to be implemented in March 2024 (pretty soon!).
How Does it Help?
With the improvements in the process of minting and burning, tzBTC becomes more accessible to the average user (and not only) who wants to bring his BTC into the Tezos ecosystem in order to take advantage of Defi opportunities (i.e. Liquidity Baking) without having to jump through hoops or worry about liquidity and fees.
Furthermore, the introduction of automation and low minimum transaction amounts opens the door for a broader audience to take advantage of arbitrage opportunities between BTC and tzBTC prices. Consequently, it is likely that tzBTC will maintain a closer peg to the bitcoin price, enhancing its stability and attractiveness within the market.
tzBTC is stepping up its game, pushing for more transparency, stability, and decentralization, setting it a notch above alternatives like WBTC on Ethereum.
So, as these new changes roll out, tzBTC 2.0 isn’t just about getting a facelift; it’s about making DeFi on Tezos cooler, more accessible, and much more attractive for bitcoin holders. The road ahead looks exciting for tzBTC, with these upgrades likely to bring in a fresh wave of users eager to dive into what Tezos DeFi has to offer. Cheers to tzBTC 2.0 and the developments that await the Tezos Defi scene!
From Bitcoin to Tezos with tzBTC 2.0 was originally published in Tezos Commons on Medium, where people are continuing the conversation by highlighting and responding to this story.
