Threshold: Scaling the Use-Case of Bitcoin

Thesis stands as a vanguard in the ongoing quest to build a more complete Bitcoin network and to enhance Web3 ecosystems. We believe this requires a holistic approach, and remain dedicated to not only advancing technological frontiers but also fostering a more accessible, efficient, and interconnected digital world.

Threshold Network, to which Thesis is one of the core contributors, exemplifies these values. It furthers the reach of Bitcoin across multiple networks, effectively bridging the gap between Bitcoin’s pioneering legacy and the dynamic possibilities of Web3. By laying the groundwork for a decentralized infrastructure, Threshold plays a crucial role in empowering and connecting users across diverse blockchain landscapes.

Threshold’s tBTC enables Bitcoin’s integration across an ecosystem for an interchain economy capable of tapping into the dormant potential of 15.4M illiquid BTC.

As opposed to other wrapped bitcoin assets, tBTC’s approach differs due to its decentralized and permissionless nature. It is designed to maintain the decentralized ethos of Bitcoin, achieved through a system that relies on a robustly audited network of users and smart contracts, rather than a central authority. This code-driven trust-less architecture is why tBTC’s stakeholders include DeFi blue chips, such as Curve. Here’s how tBTC compares to the market of wrapped BTC assets.

#Bridging Bitcoin Across Ecosystems

The Bitcoin network and its asset, BTC, stands as the cornerstone of the cryptocurrency world, a testament to the power of decentralized finance. Yet, in its current form, Bitcoin has often been limited to its blockchain, untouched by the vast innovations occurring across other networks.

Threshold’s technology solutions merge the unwavering qualities of Bitcoin with the versatility of networks like Ethereum. The introduction of tBTC, a tokenized form of Bitcoin on the Ethereum blockchain, protected by a federated decentralized node network, represents a pivotal step in this direction.

Advocates of Bitcoin may question the concept of extending BTC’s utility beyond its native blockchain over worries about diluting its fundamental principles; however, Threshold’s tBTC is meticulously crafted to extend Bitcoin’s reach while upholding its foundational principles of sovereignty and trust minimization.

By using tBTC to bridge Bitcoin to other networks, such as Ethereum and Solana, Threshold is not just opening new avenues for investment and innovation; it is also expanding the horizons for Bitcoin’s utility while preserving its intrinsic value.

The integration of tBTC across blockchains serves to democratize Bitcoin in profound ways. It opens the gates for Bitcoin holders to seamlessly venture into the world of DeFi -- a space previously beyond the grasp of traditional BTC.

Furthermore, this integration significantly enriches the entire blockchain ecosystem. The entrance of Bitcoin into these new networks via tBTC doesn’t dilute its legacy but rather reinforces the overall resilience and interconnectivity of the digital economy. It’s a testament to the adaptability and enduring relevance of Bitcoin in an ever-evolving financial landscape.

tBTC represents an opportunity to see BTC not just as a store of value, but as an active participant in the evolving landscape of DeFi. Threshold ensures that Bitcoin continues to be a central pillar in the broader blockchain narrative, not isolated by its own success, but enhanced by its integration with other networks.

#The Tech Behind tBTC

Redefining Bitcoin’s role in the DeFi ecosystem, tBTC is a decentralized tokenized version of Bitcoin on the Ethereum blockchain.

In practical terms, tBTC is dApp ready, designed to focus on user experience, and offering a straightforward and efficient way for integration via a comprehensive software development kit (SDK). This SDK makes it easier for developers to incorporate tBTC in various platforms, enhancing its accessibility and usability in the broader DeFi landscape.

tBTC operates on a decentralized and trustless model, pivotal in maintaining Bitcoin’s ethos while extending its reach. This model ensures that tBTC does not depend on a single centralized entity for its management or security.

Instead, tBTC utilizes a network of users and smart contracts to administer the process. Smart contracts are key to tBTC’s functionality as they verifiably secure the Bitcoin collateral backing tBTC tokens and ensure their redeemability. A decentralized approach to security reduces the risks associated with centralized control, for example in wBTC’s model, which preserves the integrity and trust inherent to Bitcoin.

tBTC’s independent operational framework remains free from any central entity’s control over data management and privacy. This decentralized model driving tBTC architecture embodies user autonomy, a fundamental principle of blockchain networks. It significantly diminishes the risks associated with centralized models. Contrasting with other tokenized Bitcoin solutions that mandate rigorous KYC protocols, tBTC preserves user privacy and autonomy by forgoing such requirements, aligning seamlessly with the decentralized ethos of accessibility that permeates the blockchain community.

tBTC also sports a SDK that allows developers to seamlessly integrate it with their own applications, to enable a permissionless, open-source tBTC bridge.

Another standout feature of tBTC is its privacy-centric design. Unlike some tokenized Bitcoin solutions requiring KYC procedures, tBTC operates without necessitating such processes. This lack of KYC maintains user anonymity and privacy, a cornerstone of the decentralized ethos that Bitcoin, Threshold, and Thesis uphold.

#Integrations Across Blockchain Networks

Reflecting an emphasis on interoperability, tBTC’s presence spans several blockchain networks, including Base, Solana, Optimism, Arbitrum, Polygon, and Ethereum.

As of January 30, 2023, tBTC has experienced a significant resurgence after the past year’s bear market, tripling its previous all-time high total value locked (TVL).

A distribution of tBTC Holdings, depicted on Etherscan and highlighted in a Llama Risk report, indicates dominance in the crvUSD LLAMMA Market and a significant amount bridged via Wormhole to major networks such as Arbitrum, Optimism, Polygon, Solana, and Base.

This broad integration demonstrates Threshold’s commitment to a chain-agnostic approach, ensuring seamless Bitcoin transactions across various blockchains.

By abstracting complexities associated with different networks, Threshold provides Bitcoin holders with a unified and user-friendly platform, simplifying their entry into the DeFi space.

#Strategic Partnerships Enhancing tBTC’s Utility

Threshold’s strategic partnerships give tBTC a strong and growing foothold throughout the crypto sector. A partnership with Wormhole, driven by a shared vision towards open-source development, expands tBTC’s cross-chain functionality, reinforcing its position as a versatile and secure bridge for Bitcoin in the blockchain landscape.

Through Wormhole, tBTC expands across over 20 ecosystems, driving liquidity throughout the DeFi sector. Wormhole acts as a cross-chain bridge, notably connecting the Ethereum ecosystem with networks like Polygon, enabling seamless asset movement and paving the way for tBTC’s expansion.

In addition, Threshold’s collaboration with Mango & Dual DAO is vital in establishing tBTC on the Solana network. Mango DAO’s strategic shift towards tBTC, including plans to acquire and retain up to $3M of tBTC, highlights the growing confidence and recognition of tBTC’s value in the DAO community.

Mango DAO and Dual DAO are part of a broader initiative exploring DAO-to-DAO alliances, emphasizing treasury diversification and the significant role of tBTC in these endeavors.

These collaborations enhance tBTC’s liquidity and market reach, making it a robust representation of Bitcoin in various DeFi ecosystems.

#Threshold and Thesis—Expanding Bitcoin’s Horizons

Threshold Network is revolutionizing the Bitcoin and Web3 ecosystems, championing a holistic approach to creating a more interconnected digital world. This effort extends Bitcoin’s reach beyond its native blockchain with tBTC.

Thesis upholds its commitment to decentralization and a more comprehensive Bitcoin network through its work with Threshold Network as a core contributor.