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#tzBTC: The Search Engine for “ZtzBTC”

Hello, good sirs and fair ladies (and everyone else from the fellowship of tezos)!

We are starting a new type of thread: educational ones!

Today we plan to discuss tzBTC - the elusive BTC-like token that plays an important role in

protocol! btc DeFi

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allows our users to both lend and borrow not just tezos but also tzBTC.

It’s the ability to add leverage to tez/tzBTC liquidity baking contract is what makes us stand out among the tezos DeFi projects.

What is tzBTC though? Let’s find out together!

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The purpose of tzBTC is actually quite obvious.

It allows tezos users ranging from tezosgaming aficionados to nftcollectors to gain access to Bitcoin pricing, and liquidity and have exposure to this asset while being 100% committed to staying inside the tezos blockchain.

This is achieved by making tzBTC a tezos blockchain token that corresponds one-to-one to btc through the creation and redemption mechanism that a group of trusted third-party members oversees.

They are led by Bitcoin Association Switzerland, the most reputable Swiss Crypto Foundation. And the BTC to satisfy all the tzBTC claims is kept safe by the so-called keyholders, who are a group of trusted parties managing tzBTC supply.

Keyholders can access via multi-signature wallets the underlying Bitcoin and manage the supply with minting and burning of the corresponding tzBTC. Keyholders are comprised of highly reputable crypto custody providers like Komainu and Mt Pelerin.

Gatekeepers are another part of the tzBTC ecosystem.

These actors monitor the exchange between tzBTC and BTC and ensure compliance with all the regulations.

They accept BTC after conducting KYC & AML checks (identity verification) and allocate tzBTC in return.

Gatekeeper roles are implemented by highly reputable and respected Swiss crypto investment banks such as Sygnum and Bitcoin Swiss.

Now it’s time to briefly touch on how the tzBTC peg to BTC works!

It’s made possible by three processes: initiating, minting, and burning.

Initiating is simple: a user requests tzBTC from a Gatekeeper who then performs the required KYC & AML checks to verify the User’s identity. Then the User sends BTC to the Gatekeeper in return for tzBTC tokens.

Where do these coins come from though? They are minted by Keyholders using a multi-signature setup and sent to a Gatekeeper who then allocates them to a User. This step is called minting as you have already guessed.

Burning is the reverse of initiating: a Gatekeeper can request tzBTC removal from circulation (burn) by sending them to a predefined address controlled by the Keyholder wallet. Once burned, the corresponding BTCs are transferred to a Gatekeeper and then allocated back to a User.

The process described above sounds somewhat complicated but it ensures a very important feature of tzBTC - maximum security and protection. Unlike fancy algocoins and many other clever DeFi mechanisms, the architecture of tzBTC is super stable and resilient.

This matches well with the

tezos philosophy that prefers clear, transparent, and reliable solutions over technical innovations for the sake of innovating.

And it also resonates with us at

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So how exactly does one obtain tzBTC? First, you can use @atomex_official to simply swap BTC (or even ETH )into tzBTC if you have spare Bitcoin!

@atomex_official Then you also can go to @BittrexExchange and use it to again simply exchange BTC into tzBTC!

This post is based on this twitter thread.

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