pTokens are minted using a cryptographically secure system which makes the whole process transparent, fully-auditable and automated. In fact, the issuance and burning of pBTC (along with their respective deposit and release of BTC on the Bitcoin blockchain) is handled automatically by an enclave within a Trusted Execution Environment.

But how does it compare to other cross-chain composability solutions?

We began examining our unique solution in a new series, considering how it compares to other projects taking on the same challenge of bringing liquidity and interoperability to blockchains.

In Part I, we analyzed tBTC and WBTC, a well-known “wrapping” technique.

In Part II, we assess two synthetic assets which mimic the value of Bitcoin; sBTC by Synthetix, and a hypothesized synthetic Maker-like BTC.

We’ll soon publish Part III, so follow our Medium, Twitter or join our Telegram to learn how we compare to other blockchain interoperability solutions.

Unchaining blockchain liquidity

When it comes to tokenizing assets, liquidity is as just important as a strong technological solution. The pTokens system is integrated with liquidity pools Bancor Network and Kyber Network, making pBTC available on these platforms.

Both Bancor Network and Kyber Network are on-chain liquidity protocols enabling decentralized token exchanges on Ethereum. While presenting different technical implementations, they both rank among the top decentralized exchanges on Ethereum.

Integrating the pTokens system with such liquidity protocols means a more liquid pBTC pair. Thanks to its frictionless design, pBTC opens up to market makers willing to operate on these decentralized markets.

Our liquidity partners over at Bancor are just as excited about offering pBTC to their users.

Nate Hindman, who is Head of Growth at Bancor, told Coindesk “If pBTC becomes a key on-ramp for bitcoin users to access DeFi services on Ethereum and other chains then staking BTC in the pBTC liquidity pool on Bancor could generate attractive fees and rewards for users staking their pBTC on Bancor.”

He also shared his thoughts with us — “We’re thrilled to see pBTC give Bitcoin users access to DeFi protocols like Bancor. With the newly launched pBTC liquidity pool on Bancor, any user can now stake their pBTC, generate fees from trades on Bancor, and ultimately collect their earnings in BTC.”

“The process for setting up a new liquidity pool on Bancor, or staking in an existing pool, is self-service, permissionless and requires no minimum, so we look forward to numerous pTokens liquidity pools launching in the near future, opening up Bancor staking to many more chains.”

Learn how easy it is to stake on Bancor by following this handy guide.

Our pTokenized Bitcoin (pBTC) asset is also integrated with Kyber Network, therefore making Bitcoin’s liquidity available to all Kyber users.

The pBTC reserve smart contract on Kyber aims to provide added value for its users as it levels up the game for the protocol to keep increasing its trading volumes. Because of its automated peg-in and peg-out processes, pBTC makes it easier for traders and market makers to operate in such a decentralized environment.

Shane from the Kyber team also let Coindesk know what he thought of this new integration partnership; “Bitcoin is among the most widely held and used cryptocurrencies. We are glad to support the pBTC initiative to bring Bitcoin liquidity to Ethereum DApps, enabling a whole new world of exciting decentralized finance (DeFi) use cases for both the Bitcoin and Ethereum ecosystem.”

For now pTokens are the bridge between Ethereum and Bitcoin, but can support any blockchain asset. New pTokens such as pEOS and pLTC have already been deployed in a test environment and will also soon be available on Ethereum mainnet. The system will soon apply to other assets, bringing pETH, pBTC and pDAI to other blockchains.

Community governance

While this launch is a great first milestone for the team and for the broader development of this technology, it’s still Phase Zero. Over time, the administration of the system will become more decentralized and its governance passed into the hands of the community, who will help shape the path ahead for pTokens.

What is Phase Zero? Phase Zero is the initial version of the pBTC on ETH bridge making tokenized Bitcoin assets available on the Ethereum mainnet. During this phase, the system is not on autopilot. This is to enable the development team to seamlessly improve the system and upgrade the bridge when and if required.

The pTokens solution is committed to this progressive decentralized approach, which sees the transition to community governance happening in steps, rather than “diving in headfirst”. This initial, not fully decentralized version aims to first create a secure and stable system, whose governance will then become incrementally decentralized.

We will be releasing more details on this road to decentralization in the coming months!