At Kyber, we have been facilitating seamless exchange and liquidity flows between all parts of the decentralized ecosystem. End users can buy/sell tokens instantly on KyberSwap and many of the popular wallets and websites, while developers can integrate with Kyber for a wide variety of payment and financial use cases.

Given how broadly we are working on facilitating liquidity across the decentralized ecosystem, one of the major gaps that we are constantly facing with regards to decentralized liquidity today is the fact that tokens outside of Ethereum have not been accessible for usage in decentralized exchanges and applications, with the most prominent example being Bitcoin.

As such, we have invested significant effort and research into cross-chain approaches. For instance, PeaceRelay, which we proposed last year, was the first implementation to migrate liquidity between Ethereum Classic onto Ethereum and vice versa by employing a two-way relay. We also further explored a few different approaches on how we could bring Bitcoin into Ethereum, and discussed the pros and cons of each approach.

Evaluating all these approaches, it was very clear that the current state of the industry and technical progress would not permit for a completely decentralized yet practical user-friendly solution. For example, atomic swap is a trustless solution, but is not practical and not natively usable for smart contracts. PeaceRelay only works with blockchains that support expressive smart contracts and is expensive to maintain. Having a federation to help with the tokenization and redemption of coins is technically and legally difficult to deploy in practice, and is not entirely trustless.

As a result, the journey to an ideal decentralized solution will take several major evolutions for the entire community. What we realized is important today is to advance a technically appropriate approach that can be put into functional applications right now, one that adheres to as many principles of the decentralized movement, creating the ecosystem foundation for future steps.

Introducing WBTC

As such, we have been working very hard with BitGo and Republic Protocol over the last few months on an open token standard to bring Bitcoin and potentially other cryptocurrencies to Ethereum.

Today, we are excited to announce a community-driven initiative that brings Bitcoin to Ethereum, through the creation of Wrapped Bitcoin Tokens (WBTC), an ERC20 token fully backed by real BTC and stored by regulated custodians.

Prominent projects in the space, including Gnosis, MakerDAO, Dharma, AirSwap, IDEX, Compound, DDEX, Hydro Protocol, Set Protocol, Radar Relay, Blockfolio, and Prycto have all committed to becoming launch partners, and will help to support the adoption of WBTC through either supporting the tokens, being members of the governance committee or helping to drive awareness in the space.

This widespread industry collaboration ensures that the token, from day one, will have a wide variety of adoption, including DEXs, collaterals for stablecoins or lending, ICO contributions and decentralized payments.