A tokenized BTC coming to Polkadot as it is integrated with blockchain through a cross-chain bridge to Bitcoin that will go live in the Q1 of 2021. It would enable users to transact BTC as PolkaBTC on various platforms falling under the umbrella of decentralized finance (DeFi).
Bitcoin is coming to Polkadot! @InterlayHQ will introduce Polkadot’s first trustless wrapped @Bitcoin – PolkaBTC – in early 2021. This marks an exciting step towards a truly interoperable blockchain ecosystem. https://t.co/bQZsCWD7g0
— Polkadot (@Polkadot) October 15, 2020
In the case of transferring a tokenized BTC (as like BitGo’s WBTC) out of its native blockchain, a copy of the underlying token is declared, where real BTC gets locked. And these copies of BTC are burned whenever a user shifts back to the Bitcoin blockchain.
On the contrary, PolkaBTC would get labeled in a 1:1 ratio and supported in many decentralized exchanges, lending protocols, and stablecoins.
Moreover, Interlay revealed that the permissionless and trustless nature of the ecosystem makes users have more control over their money as its working infrastructure doesn’t include any central or monitoring sector.
BTC-Parachain, since its initiation, is run by multiple nodes around the world, including community members and various companies, as a decentralized platform.
To use PolkaBTC at decentralized apps, you need to have some DOTs (Polkadot’s native token) used as collateral to mint the PolkaBTC. Three things you must have to mint are BTC wallet, Polkadot’s Wallet, and some DOTs. Interlay stated:
“In the case that a vault misbehaves, you will be reimbursed from the Vault’s collateral and will make a very profitable trade between BTC and DOT. At launch, collateral will be put down in DOT. In the mid/long run, this may be extended to stablecoins or token-sets to improve stability.”
If one wants to redeem the PolkaBTCs equivalent to a whole bitcoin, he needs to burn the tokens on the BTC-Parachain first. Interlay added,
“PolkaBTC can remain on Polkadot indefinitely (no expiry date) and can be redeemed for BTC at any point in time.”
The first Alpha testnet will be held next month for PolkaBTC, and Beta tesnet is expected in January 2021, and the mainnet launch is scheduled in the first quarter of 2021.
Also, the projects based on Polkadot would be integrated with PolkaBTC. Some of them include Moonbeam, Equilibrium, and Polkaswap.