Summary
The proposal recommends listing Threshold Network’s tBTC, as a supported collateral asset on Derive Ethereum, Arbitrum and Base markets. By adding tBTC, Derive will unlock the borrowing demand for this pegged BTC asset to provide a foundational source of yield for BTC lending within the Derive ecosystem while fostering greater liquidity and user engagement. tBTC is backed one-to-one with Bitcoin.
Motivation/Background
tBTC is Threshold’s decentralized and permissionless bridge that brings BTC to Ethereum, Arbitrum, Base, Polygon, Optimism, Solana and other chains. Users wishing to utilize their Bitcoin on Ethereum and other chains can use the tBTC decentralized bridge to deposit their native Bitcoin into the system and get a minted tBTC token in their EVM wallet.
Through an acquired Chainlink oracle, tBTC enables Derive users to have access a wrapped Bitcoin, which can be permissionlessly minted and redeemed, where the BTC that backs it is not held by a central intermediary, but is instead held by a decentralized network of nodes using threshold cryptography. This implies a fully decentralized and permissionless lending and borrowing experience for BTC (i.e. bridge native BTC to tBTC and borrow via Derive).
tBTC is present on other markets such as AAVE Ethereum market and following its approval, tBTC’s initial supply cap was reached within 72 hours, prompting an increase to meet the overwhelming demand. This rapid adoption underscores the market’s appetite for trust-minimized BTC solutions in DeFi. It is also available on Compound Ethereum market ,soon on Base and passed in a ARFC on AAVE Arbitrum market.
tBTC on Ethereum ecosystem has a current supply of 4,254 BTC worth $365M at current price, on Base 90 BTC worth $7.8M and on Arbitrum 86 worth $7.3M at current price.
Benefits for Derive
- Further decentralization and trust minimization in the Derive stack.
- A range of lending options for those who wish to earn yield on their BTC.
- High User Demand, since its initial deployment on Aave’s Ethereum market, tBTC reached its initial 500 BTC supply cap within the first week. The cap has been increased multiple times, now sitting at 2,200 BTC, highlighting strong user interest.
- Collaboration with the Threshold Network DAO.
- A range of lending options for those who wish to earn yield on their BTC.
- Preferable yields on tBTC through active incentive participation, boosting Derive protocol use, fees and TVL.
Specification
Ticker: tBTC
Contract Addresses:
Ethereum: 0x18084fbA666a33d37592fA2633fD49a74DD93a88
Arbitrum: 0x6c84a8f1c29108F47a79964b5Fe888D4f4D0dE40
Base: 0x236aa50979D5f3De3Bd1Eeb40E81137F22ab794b
Chainlink Oracles:
Ethereum: 0x8350b7De6a6a2C1368E7D4Bd968190e13E354297
Arbitrum: 0xE808488e8627F6531bA79a13A9E0271B39abEb1C
Base: 0x6D75BFB5A5885f841b132198C9f0bE8c872057BF
Useful Links:
Obs: most hyperlinks were converted to comments due to a forum limitation.
Project: https://www.threshold.network/
Minting Dashboard: https://dashboard.threshold.network/tBTC/mint
Bridge to other Chains: Portal tBTC Bridge
GitHub: https://github.com/keep-network/tbtc-v2
Docs: https://docs.threshold.network/applications/tbtc-v2
Audit: https://threshold.network/about#audits
Immunfi Bug Bounty: https://immunefi.com/bounty/thresholdnetwork/
Llama Risk Report: https://hackmd.io/@LlamaRisk/tBTC
Twitter: https://twitter.com/thetnetwork
Discord: https://discord.gg/threshold
Dune: https://dune.com/threshold/tbtc
https://dune.com/sensecapital/tbtc-liquidity
Emission schedule
tBTC is one-to-one backed with real Bitcoin, meaning that there isn’t an emissions schedule, but a mint and redeem function that adjusts the supply of tBTC based on native BTC coming into and out of the system.
High-level overview of the project and the token.
tBTC is a decentralized wrapped Bitcoin that is 1:1 backed by native BTC. Unlike other wrapped Bitcoins, the BTC that backs tBTC is not held by a central intermediary, but is instead held by a decentralized network of nodes using threshold cryptography.
tBTC is trust minimized and redeemable for native BTC without a centralized custodian. It can be used across the entire DeFi ecosystem.
tBTC can be used as collateral, liquidity, a store of value, and can be integrated with DeFi apps across all supported blockchains.
As with other BTC wrappers, tBTC provides cryptocurrency traders and general users with a BTC-pegged token, that can be used to generate yield whilst holding native BTC.
Positioning of the token in the Derive ecosystem. Why would it be a good borrow or collateral asset?
Adding support for tBTC on Derive Ethereum, Arbitrum and Base markets as an asset would allow tBTC holders to obtain a yield on their tBTC holdings.
tBTC is the only way to permissionlessly borrow and lend BTC in a decentralized manner. This gives Derive direct access to the 1.9 trillion market of BTC, for which centralized competitors provide limited access to.
History of the project and the different components: DAO and products.
tBTC v1 was launched in May 2020 as a decentralized Bitcoin bridge on Ethereum by an effort of contributors. It was developed initially by Keep Network in collaboration with Summa and was designed to use a system of bonded operators to secure BTC deposits via a random beacon and threshold cryptography.
tBTC v1 had an initial surge of interest, but its growth was limited due to architectural constraints. It was listed on Uniswap, Curve, and other DeFi platforms, competing with WBTC, renBTC, sBTC and others.
tBTC v2 was then created and developed under the Threshold Network DAO and aimed to fix tBTC v1’s limitations. It extensively utilises the Threshold Network’s threshold cryptography to create a secure BTC asset. tBTC is a product launched on Threshold Network, on which many other decentralized applications are being built.
Threshold Network DAO was born out of the first on-chain merger between two decentralized protocols, Keep Network and NuCypher early in 2022. The DAO has successfully operated since that time, and supports an active community of contributors that work towards building tBTC liquidity and usability.
How is tBTC currently used?
tBTC is used across a variety of chains and use cases. Some key utilities include Aave, Compound, GMX, EigenLayer, Synthetix, Morpho, Symbiotic, collateral asset for crvUSD, thUSD and solvBTC.
A comprehensible list can be found here:
https://defillama.com/yields?token=TBTC 4 & https://linktr.ee/earnyield
Token & Protocol, permissions (minting) and upgradability, multisig and signers?
For tBTC, wallets are created periodically. In order for the wallet to move funds, it produces signatures using a Threshold Elliptic Curve Digital Signature Algorithm, requiring 51-of-100 Signers to cooperate. The 100 signers on each wallet are chosen with our Sortition Pool, and the randomness is provided by the Random Beacon. More can be found here - Wallet Generation | Threshold Docs
The Threshold Council multisig is a 6/9 Gnosis Safe multisig with 9 unique signers that form the Threshold Network Council. The Council has limited upgrade privileges over the smart contracts. However, those privileges do not include any custodial power over deposited BTC:
Council Multisig Ethereum Address: 0x9F6e831c8F8939DC0C830C6e492e7cEf4f9C2F5f
Council Multisig Arbitrum Address: 0x9F6e831c8F8939DC0C830C6e492e7cEf4f9C2F5f
Council Multisig Base Address: 0x518385dd31289F1000fE6382b0C65df4d1Cd3bfC
Market data (Market Cap, 24h Volume, Volatility, Exchanges, Maturity)
Market capitalization: $365 USD / 4,254 BTC (Ethereum), $7.8M / 90 BTC (Base) / $7.3M / 86 BTC (Arbitrum)
Decentralized exchange liquidity pools: https://defillama.com/yields?token=TBTC
Dashboard on Decentralized LP liquidity: https://dune.com/sensecapital/tbtc-liquidity
& https://dune.com/lrsaturnino/tbtc-on-arbitrum
Social channels data (size of communities and activity)
Discord: 10,175
Twitter: 38,400
Github: 4,596 commits
Date of Deployment: August 2021
Number of transactions: 2.393.648 (across all chains)
Number of token holders: 15.918 (across all chains)
Risk parameters
Suggest waiting for the feedback from risk teams for suggested parameters.