tBTC (TBTC)
tBTC (TBTC): Decentralized Bitcoin on the Ethereum Blockchain
tBTC (TBTC) represents a significant advancement in blockchain interoperability, functioning as a decentralized bridge that allows Bitcoin to be used on the Ethereum network. Unlike centralized alternatives that rely on a single custodian to hold locked Bitcoin, tBTC operates on a trust-minimized model. It enables BTC holders to mint tBTC, an ERC-20 token fully backed 1:1 by their Bitcoin, and deploy it across Ethereum's vast decentralized finance (DeFi) ecosystem. This unlocks the immense value of Bitcoin for use in smart contracts, something not natively possible on the Bitcoin blockchain.
The system is secured by the Threshold Network, which utilizes a group of independent, economically incentivized signers. These signers bond collateral in the Threshold (T) token and are randomly selected to approve minting and redemption requests. This distributed mechanism, based on threshold cryptography, eliminates single points of failure and ensures that users can always redeem their tBTC for BTC without permission. This robust security model provides a reliable way for users to gain exposure to DeFi yields and applications without selling their core Bitcoin holdings.
Technology
tBTC (TBTC) operates as an ERC-20 token on the Ethereum blockchain, making it compatible with the entire DeFi and Web3 ecosystem. Its core technology is a decentralized bridge protocol managed by the Threshold Network. Security is maintained through a system of 'signers' who stake Threshold's T token as collateral. Using threshold cryptography, a minimum number of these independent signers must cooperate to manage the Bitcoin held in custody, preventing any single entity or small group from controlling the funds. This trust-minimized design ensures that the minting of tBTC and redemption back to BTC is censorship-resistant and secure.
Tokenomics
The tokenomics of tBTC (TBTC) are designed for stability and direct correlation with Bitcoin. The total supply of tBTC is elastic, directly corresponding to the amount of Bitcoin locked in the system's decentralized custody. For every 1 tBTC in circulation, there is 1 BTC held in reserve, ensuring a constant 1:1 peg. The primary utility of the tBTC token is to serve as a liquid, fungible representation of Bitcoin within Ethereum's DeFi protocols. Governance of the tBTC protocol is managed by the Threshold DAO, where holders of the T token can vote on system parameters and upgrades, ensuring community-led development.
Ecosystem
Within the broader crypto ecosystem, tBTC (TBTC) serves as a critical infrastructure piece for cross-chain liquidity. Its main competitor is WBTC, but tBTC differentiates itself through its commitment to decentralization and trust minimization, which appeals to users prioritizing security and censorship resistance. As part of the Threshold Network, tBTC is a flagship application that showcases the power of threshold cryptography. It is integrated into major DeFi platforms for lending (Aave), borrowing (Compound), and automated market making (Uniswap, Curve), positioning it as a foundational asset for a more open and interconnected financial system.
Frequently Asked Questions
tBTC (TBTC) is a decentralized, fully Bitcoin-backed ERC-20 token on the Ethereum blockchain. It allows you to use Bitcoin in Ethereum's DeFi ecosystem in a trust-minimized way, with each tBTC token pegged 1:1 to BTC.
You can acquire tBTC (TBTC) in two main ways: by minting it directly on the Threshold Network dashboard by locking your BTC, or by swapping other cryptocurrencies for it on a decentralized exchange (DEX) like Curve or Uniswap.
The primary difference is centralization. WBTC relies on a centralized custodian (like BitGo) to hold the backing Bitcoin. tBTC is decentralized, using a network of bonded signers on the Threshold Network to secure the Bitcoin, eliminating a single point of failure.
tBTC is designed with a strong focus on security. It uses threshold cryptography and a network of economically incentivized, over-collateralized signers to protect the locked Bitcoin. The protocol is open-source and has been audited by security firms.
The main use case for tBTC (TBTC) is to use your Bitcoin as collateral in DeFi protocols. You can lend it to earn interest, use it to borrow other assets, provide liquidity to trading pools on DEXs, or use it in various yield farming strategies on Ethereum.
The 1:1 peg is maintained because every tBTC token is fully backed by an equivalent amount of BTC held by a decentralized network of signers. Users can redeem their tBTC for the underlying BTC at any time, which ensures the token's value remains tied to Bitcoin through arbitrage.
Since tBTC (TBTC) is an ERC-20 token, you can store it in any wallet that supports Ethereum-based tokens. This includes popular wallets like MetaMask, Ledger, Trezor, and Trust Wallet.
The Threshold Network provides the decentralized infrastructure that powers tBTC. It manages the network of signers, the staking of the T token as collateral, and the threshold cryptography that secures the entire system, making trust-minimized Bitcoin on Ethereum possible.