“Wrapping BTSE token to an ERC20 token allows BTSE to take part in the DeFi ecosystem.”
Ethereum ERC20 tokens have advantages, and we decided to make use of them. We are introducing the wrapped BTSE token, which is an ERC20 token that represents the BTSE token.
Wrapped BTSE token utilizes a custodian model to implement the tokenization of the BTSE token on Ethereum. Each wrapped BTSE token is minted into existence, and there is an equivalent amount of BTSE token held in custody at a 1:1 ratio.
The wrapped BTSE token remains in circulation until the BTSE token backing is withdrawn, and the equivalent wrapped BTSE tokens are burnt.
By wrapping BTSE tokens into an ERC20 token, it leverages the Ethereum network to enable new applications and use cases for BTSE tokens by combining the liquidity and adoption of BTSE tokens with the ecosystem of Ethereum. It expands BTSE token usage by facilitating more decentralized use cases, such as trading BTSE tokens on decentralized exchanges, loans, borrowing, and payments.
If this reminds you of WBTC or Wrapped BTC, then you’re right. BTSE is currently using Liquid, but Liquid has 0 tractions on exchanges, and we can’t expect them to support Liquid. By letting users choose the Ethereum network, we open up the possibility to get listed on decentralized exchanges such as Uniswap or Sushiswap.
We are not abandoning Liquid, and its privacy features. Still, the popularity of Ethereum network effects is undeniable, and we are excited to expand the reach of BTSE tokens to a broader, more positive community.
Liquidity on Decentralized Exchanges and DApps
Most decentralized exchanges, for example, Uniswap and Sushiswap offer only Ethereum ERC20 token support and no support for Liquid tokens.
By wrapping BTSE tokens into an ERC20 token, we can bridge this gap and provide more liquidity on decentralized exchanges. Also, this can open up a lot more opportunities for BTSE token holders such as opening the doors to decentralized applications/protocols (like funds, and lending payments) and providing liquidity on Uniswap and profit from AAM (automated market-making).
Uniswap has become very popular since it allows anyone to swap tokens easily without the need for KYC, liquidity pools, and automated market-making.
Interoperability Between Cryptocurrencies
Wrapping the BTSE token into an ERC20 token opens all the capabilities the Ethereum blockchain offers. One ability is for initial coin offerings (ICOs) to be directly funded and mint tokens on deposits of wrapped BTSE tokens.
Another advantage is that in the future, centralized exchanges and other institutions which accept cryptocurrencies won’t need to maintain multiple nodes or bother with liquid integration and instead could make use of the Ethereum network to integrate BTSE token support.
Minting
Minting refers to the process of creating new wrapped BTSE tokens. Minting has to be done by a custodian but needs to be “initiated” by a merchant. It’s a set of transactions done between two.
The minted supply Etherscan link can be found here: https://etherscan.io/token/0x666d875c600aa06ac1cf15641361dec3b00432ef
Burning
Burning refers to the action of redeeming BTSE tokens for wrapped BTSE tokens. Only merchant addresses can burn the wrapped tokens. The ‘burn’ function is called in the contract with the amount of tokens to burn on the Ethereum chain and the amount will be deducted from the merchant’s wrapped BTSE token balance, which leads to the supply of wrapped BTSE tokens being reduced.
To summarize, the BTSE supply remains the same. On the Liquid side, we lock up tokens representing the number of BTSE tokens on Ethereum and unlock them if they are moved back. We will publish a treasury address
Initially, early adopters already converted 1,000,000 in BTSE. Will transfer those and give you an address.
It will operate like Tether, where the user can choose the network. With Tether, you can select the OMNI or Ethereum network. This will be the same for the BTSE token to keep it user-friendly.
Atomic swaps
Atomic swaps can be used between merchants and users to exchange wrapped BTSE tokens and BTSE tokens. If the user would like to receive BTSE tokens on the Ethereum network or BTSE on Liquid more quickly, a trusted method of exchange could also be done through the merchants.
- A user generates a secret and a hash of it is provided to the merchant off-chain. The user and the merchant also agree on other swapping details such as receive addresses (ETH and BTSE)
- The user creates a BTSE HTLC (Hashed Time Lock Contract) using the merchant’s BTSE address, the user’s refund address, secret hash, and expiration time. This is used to create a P2SH address which the user funds with X BTSE
- After 6 confirmations, the merchant will create an HTLC contract on Ethereum, by using the user’s Ethereum address, merchant’s refund address, secret hash, and expiration time. The merchant then transfers X-wrapped BTSE to the atomic swap contract.
- The user reveals the secret in order to move X-wrapped BTSE from the atomic swap contract to the user’s Ethereum address
- The user reveals the secret in order to move X-wrapped BTSE from the atomic swap contract to the user’s Ethereum address
- The merchant uses the secret in order to move BTSE token funds from the P2SH address
- If the user does not claim the X-wrapped BTSE within the expiration time, the transaction does not go through and the user can claim the BTSE tokens back
. . .
BTSE token holders can lend their BTSE tokens on the Ethereum network and earn interest. We recognize the innovation that Ethereum is providing — providing a liquidity bridge for BTSE tokens. Wrapping the BTSE token to an ERC20 token allows BTSE to take part in the DeFi ecosystem. Trade BTSE tokens in a decentralized way through decentralized exchanges such as Uniswap or Sushiswap, you can trade BTSE tokens against other assets without having to rely on a centralized exchange. If you would like to trade BTSE tokens with leverage, then there’s the opportunity to do that. In theory, you can also earn interest on a lending protocol. In this way, you can generate returns.
Another way for BTSE tokens to generate returns is to fund a liquidity pool on Uniswap, for example, and become a market maker. Use an equal amount of two different assets to facilitate trading between them. By joining a liquidity pool, there’s an opportunity to generate returns from the trading fees.
Since BTSE tokens can be wrapped into ERC20 tokens, it’s now listed on Uniswap to trade. We’ve added liquidity to the pool.
https://app.uniswap.org/#/swap/0x666d875c600aa06ac1cf15641361dec3b00432ef
Another possibility is TokenSets. It uses a smart contract to adjust your portfolio weights programmatically. It adjusts dynamically on the Ethereum blockchain. Set up trading strategies thanks to tokenized BTSE tokens. There are many different decentralized exchanges and leveraged trading protocols that could integrate wrapped BTSE tokens.
Wrapped BTSE tokens offer one of the most attractive use cases. It’s very user-friendly since an Ethereum wallet is all one needs. Ethereum is well-known, advanced, and growing. Most excitingly is Ethereum 2.0, which could supercharge scaling and interoperability. We’re very excited to see BTSE tokens used in the DeFi ecosystem. BTSE token on Ethereum is acting as a bridge between the Liquid and Ethereum ecosystems. It also means that BTSE tokens won’t be excluded from the DeFi revolution.
Our aim is to create a platform that offers users the most enjoyable trading experience. If you have any feedback, please reach out to us at feedback@btse.com or on Twitter @BTSE_Official.
Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.
