Threshold network goes live with wormhole to bridge Bitcoin to 20 blockchains
Threshold Network is now working with cross-chain token protocol Wormhole in an effort that hopes to allow easy movement of a tokenized representation of bitcoin (BTC) to around twenty blockchain ecosystems.
Wormhole proposed its integration into the Threshold community in mid-April, saying the goal was to help threshold bitcoin (tBTC) become the dominant bitcoin representative token in on-chain DeFi ecosystems. That deal won strong community support and was fully approved on April 29 after a governance vote.
tBTC is a Bitcoin-backed token that allows users to access Ethereum and the DeFi ecosystem across chains. Each tBTC token is fully backed by 1 bitcoin held in reserve.
The wormhole integration will allow tBTC to be transferred to both Ethereum Virtual Machine (EVM) chains, such as Arbitrum, Optimism, and Polygon, and non-EVM chains such as Solana, Aptos, Sui, and Cosmos.
Using bitcoin on other networks previously required users to rely on centralized bridges, increasing the risk for token holders. Bridges are blockchain-based tools that allow the transfer of tokens between different networks – a mechanism that opened up huge security risks and fell victim to billions of dollars worth of exploits in 2022.
The Wormhole bridging plan relies on a new method of bridging ERC-20 tokens that enables efficient distribution of capital to Ethereum sidechains.
Instead of creating wrapped tokens for each chain, which soaks up valuable liquidity that can be spent elsewhere, tBTC will be minted on Ethereum.
A canonical token – i.e. one native to an ecosystem rather than packaged – will then be distributed for each new chain. In this way, the tBTC supply remains intact and the risk is limited in local ecosystems.
“Wrapped Bitcoin has historically had a problem of centralization risk that has prevented strong, secure adoption of BTC in on-chain DeFi,” Wormhole Core Contributor Robinson Burkey explained in a note to CoinDesk.
It is also expected that the collaboration will involve Threshold DAO launching a cross-chain liquidity bootstrapping operation with the potential to attract up to 26,000 BTC in deposits, a representative told CoinDesk via Telegram message.
Savvy liquidity providers will seed tBTC liquidity in key ecosystems in exchange for the opportunity to purchase $20 million worth of Threshold’s initial t(T) tokens at or above the spot price.
