With WBTC Kyber Network has created a new Stable Coin. This is a ERC20-Token that is backed by Bitcoin. Traders can trade these on different decentralized crypto-exchanges, such as IDEX.
There’s no question that stablecoins the Hype of this year’s bear market. Whether it comes to issues that are critical to Tether, or new types of Stable-Coins, crypto-currencies interested can save the currently hardly. Bitcoin has at the moment, a volatility that can compete with the classic Fiat currencies – what is there to develop as a Bitcoin-covered Stable Coin?
Irony aside, such a Token can be a decentralized crypto-exchanges are of great value. As a result, the liquidity on crypto could increase exchanges such as IDEX or DDEX dramatically. Also could be used by the Bitcoin-coupling, similar to a Sidechain solution for Bitcoin Smart Contract capabilities of Ethereum.
To achieve this coverage, Kyber Network with WBTC a ERC20-Token, whose value is of a Bitcoin.
“Wrapped Token” semi-distributed coverage of Bitcoin
In Kyber Network relies on a centralized management as in the classical Asset-backed stablecoins to a decentralized, algorithmic hedging. Instead, the project is a middle ground, to tread, it is referred to as a “Wrapped token”. No single Institution, but a kind of consortium, care of the Stable Coin. This consortium consists of different stakeholders:
- Custodians (Depositary) are those instances that the Bitcoin inventory to manage. They guarantee the security of the stocks on a Multi-Signature Wallet, so you can only send a limited circle of traders Bitcoin.
- Traders are those stakeholders, the WBTC to interested to sell or new Bitcoin purchase. In addition, they initiate a token generation or destruction.
- The Wrapped Token Contract forms a link between the dealer and the Custodian. Although the dealer may initiate the generation and destruction of WBTC, however, the Custodian must confirm this definitively, before the Smart Contract for the Supply of WBTC-Token is changed.
- A cartel from Custodians and traders to prevent, is to a DAO to WBTC. Members of this decentralized Autonomous organization can change the Token Contract, and the other stakeholders re-occupy it.
The interested user of such Token will only interact with the dealers in contact. In order to create nonetheless confidence to engage different measures. For a quarterly audit by external assessors are planned. You want to strive for transparency, and the Details of all the various stakeholders to appoint, as well as the entire inventory of the stored BTC and WBTC in a Dashboard. Finally, it is important to emphasise that both the Custodian as well as the dealer has not Power over the token generation.
Bretton Woods sends his regards – The danger of derivatives
The reading of the White Paper is, without doubt, interesting. You will now have to see how transparent the project WBTC will be at the end, and whether the Bitcoin Wallet address and the Smart Contracts are accessible to the public.
Reason for concern is the fact that the DAO can change the Token Contract. A unique feature of Bitcoin is its limitation, which is associated with the claim as “digital Gold”. This limitation is ensured by the fact that almost 10,000 Nodes have to agree to such a Change. In WBTC, it is assumed that significantly fewer stakeholders for the Governance responsible. While this may not change the amount of Bitcoin, you could change the cover ratio of the Stable Coin – or the coupling between WBTC and Bitcoin completely abolish it.