Cryptocurrency custody company BitGo and decentralized exchange startups Kyber Network and Republic Protocol have announced the planned launch of a fully-backed Bitcoin (BTC) ERC20 token on the Ethereum (ETH) ecosystem.
Dubbed Wrapped Bitcoin (WBTC) and scheduled to launch in January 2019, the new token will be backed by Bitcoin on a 1:1 ratio, the three founding companies revealed in a joint press release on Friday.
“This initiative will be bringing together the liquidity of Bitcoin and the extensive smart contract developer ecosystem of Ethereum.” said Loi Luu, co-founder and CEO of Kyber Network. “Applications on Ethereum such as decentralized exchanges and financial protocols will all be able to use Bitcoin seamlessly, creating bitcoin trading pairs which have been impossible until now. At the same time, the usage of Bitcoin will be expanded by having more decentralized use cases, such as exchange, loans, token payments.”
A number of decentralized exchanges and financial projects are participating in the project as launch members and have committed to to support the adoption of WBTC. These include MakerDAO, Dharma, Airswap, IDEX, Compound, DDEX, Hydro Protocol, Set Protocol and Prycto.
To add initial liquidity to the project, Republic Protocol and Kyber Protocol will pre-mint some WBTC tokens from their own Bitcoin inventories and make the coins available to the users via atomic swap.
BitGo will act as the primary custodian in charge of holding the BTC reserves. Back in September, the US-based blockchain security company received public trust company status from the South Dakota Division of Banking, allowing it to operate as a ‘regulated’ custody for institutional investors.
Describing the upcoming coin as a “transformational community effort,” BitGo said in a separate statement on Friday that the WBTC launch is following “significant institutional interest” in tokenization of assets like securities, commodities, and real estate.