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The new tzBTC token from the Tezos Foundation and the Bitcoin Association Switzerland is promised to bring more access to both networks.
A few firms including the Bitcoin Association Switzerland (BAS) and the Tezos Foundation have announced that a new token will be launched soon. The new token is called tzBTC, and is backed 1:1 to Bitcoin, on the Tezos blockchain.
The partners have also said that tzBTC will be the first vehicle for decentralized finance (DeFi) on the Tezos blockchain.
Speaking in a statement, BAS President Lucas Betschart says the new token merges both systems, creating more connectivity between them. He said:
“The tzBTC brings the brand and liquidity of Bitcoin to the Tezos blockchain and gains the potential for rich functionality made possible by Tezos smart contracts.”
Another advantage tzBTC brings is some level of interoperability between both systems. The tzBTC token can fully function on the Tezos blockchain, allowing some semblance of Bitcoin on the blockchain. It will also work with Tezos decentralized applications.
Speaking to The Block, Swiss Crypto Tokens CEO Armin Schmid likened the connection between Tezos and Bitcoin to “bringing the railroad to the gold mine.” Schmid says that the development allows “transportability” and creates new possibilities.
The official tzBTC website specifies wallets that support tzBTC including AirGap and Ledger.
How tzBTC Will Work on Tezos
The plan for tzBTC is that the token’s major stakeholders will either be Gatekeepers or Keyholders.
The job of Gatekeepers will be to allot tzBTC tokens to users, in exchange for Bitcoin. They are financial intermediaries who would have to ensure compliance to know-your-customer (KYC) and anti-money laundering (AML) regulations. Gatekeepers include crypto exchanges such as Taurus, Bity, and other firms like Bitcoin Suisse, Woorton and Sygnum.
On the other hand they are Keyholders who will basically serve as custodians who will mint and burn tokens upon redemption. They include blockchain company Inacta, crypto legal company LEXR, Swiss Crypto Tokens, and Taurus.
The BAS’ tzBTC page says that the token allows the Tezos network to take advantage of Bitcoin’s general stability and liquidity. By expanding Bitcoin’s utility, BAS also says tzBTC cements Bitcoin’s king coin status.
The page also gives some insight into how the token will run. The tzBTC system will use a multi-signature framework, which will not need a central issuer, ensuring transparency. It also says that the BAS will function as a third-party mediator, ensuring the platform’s integrity.
“In a nutshell, we make sure there will never be more tzBTC issued on the Tezos blockchain than Bitcoins [held] in the keyholders multi-signature address.”
Tezos has also introduced StakerDAO (decentralized autonomous organization), to power investments in proof-of-stake (PoS) blockchains. Tezos Capital CEO Jonas Lamis has ensured StakerDAO’s security and decentralization. It will also allow participants to decide how they’d earn validator rewards.
StakerDAO will launch on the Tezos blockchain and will launch this month.