On July 8th, Switcheo announced the addition of Wrapped Bitcoin (WBTC) markets to its decentralized exchange (DEX), which previously offered trading pairs across NEO, ETH, EOS, and stablecoin markets. The first two trading pairs in Switcheo’s WBTC markets are NEO/WBTC and ETH/WBTC.
What is WBTC?
WBTC is a community-driven project jointly initiated by BitGo, Republic Protocol, and Kyber Network to create an open standard which enables Bitcoin (BTC) to interact with the Ethereum blockchain. WBTC, an ERC-20 token representation of Bitcoin, is backed 1:1 by BTC initially held in custody by BitGO, with potential to increase the number of custodians by a WBTC DAO vote.
The WBTC open framework is managed by the WBTC DAO, a collective comprised of the three organizations mentioned above, all participating merchants, custodians, and other organizations that may not necessarily play merchant or custodian roles. The WBTC token contract is governed by a multi-signature contract in which signatures from existing decentralized autonomous organization (DAO) members are required to add or remove DAO members, custodians, or merchants from the system.
According to the WBTC white paper, the custodian role will be responsible for securing BTC and holds the keys to mint new WBTC into circulation. The custodians only mint new WBTC after a merchant initiates the minting process, sends the BTC to the custodian address, and the custodian has waited for six confirmations. The wrapped tokens will mint to, and burn from the merchant wallet when BTC is redeemed for WBTC.
Currently, BitGo is the sole custodian, while both Kyber and Republic Protocol perform the merchant role, alongside other entities like MakerDAO, 0x protocol, plus more. WBTC DAO members not designated as custodians or merchants include entities like Blockfolio, Gnosis, and Loopring.
With a focus on transparency, the WBTC website includes a dashboard where transactions, participating partners, and proof of assets can be verified.
WBTC Significance to Switcheo
The WBTC website cites that WBTC is “developed for traders, institutions, and dApps.” Institutions and dApps already integrated with the Ethereum network, like Switcheo, benefit from WBTC because it bridges Bitcoin liquidity without the complexities involved when integrating directly with the Bitcoin blockchain.
As Switcheo offers atomic swaps between NEO and Ethereum, the addition of WBTC makes Switcheo the first DEX to offer the ability to buy or sell NEO with the BTC-pegged token through a cross-chain atomic swap.
The original announcement from Switcheo can be found here: