This is proposal is co-authored by @Eastban.
- Keep and NuCypher recently merged networks to create Threshold network
- tBTC v2 is launching on the Threshold network
- Open new mBTC / tBTC v2 pool on mStable
- Switch MTA incentives from tBTC v1 pool to new tBTC v2 pool
- Open a future DAO proposal on Threshold network to add extra incentives in T to the new pool
- Set up a Threshold x mStable community AMA to discuss tBTC v2 and this proposal
Background on tBTC:
tBTC is a fully trustless, decentralized and censorship-resistant asset bridge between bitcoin and ethereum blockchains. It is built to give Bitcoin the capabilities of Ethereum and bring additional collateral to DeFi. The asset is an ERC-20 pegged to Bitcoin, it can be minted or redeemed for BTC by anyone and without intermediaries. Instead of relying on a single custodian like wBTC or federation of custodians like Liquid, tBTC is supported by a decentralized bonded multi-federated peg model using ECDSA technology. Being alive and without incidents for a whole year, reassures that in spite of being a cornerstone of advanced cryptographic achievements TBTC works as intended.
It’s only drawback in v1 proved to be its scalability. Capital intensity imposed restrictions on the system’s ability to grow beyond a certain point.
tBTC v2 addresses this drawback while respecting, in fact enhancing the trustless, decentralized features of v1.
- To overcome capital inefficiencies of v1 an assumption is introduced in v2 that’s common in other areas of cryptography (bitcoin and ethereum blockchains e.g.) — an honest majority assumption.
- Based on that, tBTC is being re-architected in the following way:
- Instead of 3-of-3 wallets, each wallet will have sets of at least 100 signers with a threshold of 51, picked randomly from a pool of ~2000 signers active in Threshold Network.
- Instead of one wallet per deposit, the system generates a new wallet roughly every week.
- Stakers no longer putting down KEEP and ETH
- These actions provide a way to greatly decrease the collateral ratio, and capital need, of the staking assets but it’s also not risk-free. In the (statistically unlikely) event enough signers in a set collude, there’s an additional insurance backstop called Coverage Pools.
- Coverage pools consist of cryptoassets that are deposited by tokenholders to insure against fraud while earning yield.
This dual approach overcomes scalability issues and capital constraints of v1, and while preserving censorship-resistant and trustlessness it will allow v2 become an immensely scalable asset bridge.
In short, v2 makes TBTC a viable competitor to wBTC on an economic basis, but entirely permissionless and decentralized.
Background on Threshold Network:
- The tBTC system runs (on Keep Network and soon) on Threshold Network, which is the upgraded result of Keep Network’s merge with NuCypher network.
- Keep Network and NuCypher have been independently developing privacy preserving networks for the last years and are combining their collective efforts with the codename KEaNU merger, now called Threshold Network. The resulting merged network comprehends ~2000 independent nodes and strengths the utility and resiliency of both platforms, while creating an anchor in the sector of private, cross-chain value bridges supported by threshold cryptography.
Proposal main topics
These are the five topics included in the present proposal which we want to discuss with the mStable community.
- Upgrade/Migrate current tBTC/mBTC fpool to tBTC v2/mBTC fpool
- Right now we’re deploying v2 on silent mode, only our communities know about this launch right now.
- Offering mStable pool as part of this dark launch should attract far more liquidity.
- Switch MTA incentives from old v1 pool to new v2 pool
- Open a future DAO proposal on Threshold network to add extra incentives in T to the new v2 pool.
- Set up a Threshold x mStable community AMA to discuss tBTC v2 and how our communities can work together on the dark launch.
- Explore joint marketing and further community collaboration opportunities such as adding mStable to the coverage pool v2 asset allow list
- One of the first protocols to integrate tBTC v2 meaning more of the tBTC v2 liquidity will land in mStable
- Extra incentives from T DAO
- Continued collaboration opportunities in the future
- Mutual marketing
- Handling the tBTC v1 to tBTC v2 pool migration