tBTC proposed as DAI collateral type to DeFi lending protocol Maker

Quick Take

  • tBTC has been proposed as a DAI collateral type to DeFi lending protocol Maker
  • tBTC project lead Matt Luongo said: “While I believe BTC can be great collateral for DAI, more importantly, I believe a native BTC on-ramp into the ecosystem can grow the protocol’s user base.”
  • The proposal by Luongo comes on the same day when wBTC got added to Maker as a DAI collateral type

tBTC, a yet-to-be-launched Ethereum-based token backed 1:1 by bitcoin, has been proposed as a DAI collateral type to DeFi lending protocol Maker.

The proposal was put forth by tBTC project lead Matt Luongo on MakerDAO’s forum on Sunday. Luongo said tBTC is supported by “a decentralized bonded multi-federated peg model” instead of “a single custodian like wBTC or federation of custodians like Liquid,” which allows redeeming tBTC for BTC “at any time without 3rd party friction.”

"We’ve built a Bitcoin sidechain to Ethereum, meant to give Bitcoin the full superpowers of Ethereum and bring additional collateral to DeFi," said Luongo, adding: "While I believe BTC can be great collateral for DAI, more importantly, I believe a native BTC on-ramp into the ecosystem can grow the protocol’s user base. An on-ramp into DAI and Ethereum that avoids centralized gatekeepers and unnecessary third parties is the best way to introduce Bitcoiners to the Ethereum ethos en masse and bridge the two cultures."

tBTC is scheduled to get launched on May 11 for public use. A number of DeFi projects, including MakerDAO, Compound and Uniswap, have all signaled willingness to partner with tBTC as it launches.

“After May 11th 2020, tBTC will be listed on OasisDEX, Uniswap, Radar Relay, Loopring, and Kyber, among other exchanges and DeFi projects. tBTC can also be directly minted and redeemed using the BTC and ETH chains,” said Luongo.

It remains to be seen whether MKR holders give this proposal any thoughts. The suggestion comes on the same day when MKR holders approved a proposal to add Wrapped Bitcoin (wBTC) as the lending protocol's latest collateral type.

wBTC became the fourth collateral type on Maker - joining ETH, USDC and BAT - for the creation of the stablecoin DAI. "The addition of WBTC means that Bitcoin holders can now turn their BTC into WBTC (bring Bitcoin to the Ethereum blockchain), and then use it to generate Dai," said MakerDAO.

A core concept behind wBTC and other bitcoin-pegged ERC20 tokens is to extend bitcoin's liquidity to Ethereum, effectively serving as a bridge between the two blockchain networks.


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Yogita is a senior reporter at The Block and covers all things crypto. Before joining The Block, Yogita worked for CoinDesk and The Economic Times. She can be reached at [email protected] Follow her on Twitter @Yogita_Khatri5.