What Do We Know About New Synthetic BTC
Bitcoin (BTC) and Ethereum (ETH) have remained popular digital currencies for trading due to their widespread adoption and growing use cases. BTC, the first-ever cryptocurrency, has a market cap of over $1 trillion, making it the largest cryptocurrency by market capitalization. Meanwhile, ETH, the second-largest cryptocurrency, has a market cap of over $200 billion and is widely used for smart contracts and decentralized applications (dApps). Despite their differences, both BTC and ETH have played a significant role in the growth and evolution of the cryptocurrency market.
In this article, we will explore the continued popularity of BTC and ETH and delve into the recent news of a new synthetic Bitcoin coming to the Ethereum blockchain. We will discuss the potential implications of this development for traders and the wider cryptocurrency market.
Why Do People Invest in BTC and ETH?
People trade with BTC and ETH because they offer unique features that make them valuable assets for investors. BTC, for example, has a fixed supply, with only 21 million coins ever to be mined. This makes it a scarce asset, similar to gold, and hence it has gained popularity as a store of value. BTC also has a high level of security, which is achieved through its blockchain technology, making it difficult to hack or manipulate.
ETH, on the other hand, has additional features beyond being a store of value. It is the foundation for many decentralized applications (dApps) and smart contracts. ETH provides a platform for developers to build decentralized applications and operate smart contracts, which can automate certain financial processes. This opens up the possibility for new business models and revenue streams.
Despite their popularity, there are still risks associated with investing in BTC and ETH. One of the main risks is their volatility, with prices that can fluctuate rapidly and without warning. The cryptocurrency market is still relatively new and largely unregulated, which contributes to the volatility. The lack of regulation also exposes investors to fraud and scams, with some unscrupulous actors taking advantage of the hype surrounding cryptocurrencies to defraud unsuspecting investors.
Another negative aspect of BTC and ETH is their energy consumption. The mining process for these cryptocurrencies requires a lot of computational power, which in turn requires a significant amount of energy. This has raised concerns about the environmental impact of BTC and ETH mining.
Investors should also consider the potential for regulatory changes that could impact the value of BTC and ETH. While the decentralized nature of these cryptocurrencies is a key feature, it also makes them vulnerable to regulatory crackdowns by governments and financial institutions.
In conclusion, BTC and ETH remain popular cryptocurrencies for trading due to their unique features and growth potential. As with any investment, it is important to conduct thorough research and due diligence before investing in BTC or ETH.
New Synthetic BTC You Need to Check
Badger DAO has announced its plans to launch a decentralized synthetic Bitcoin called eBTC on the Ethereum network. The primary objective of eBTC is to be one of the most decentralized synthetic Bitcoin assets in the market backed solely by liquid-staked ether (ETH) and dependent on immutable smart contracts. Currently, the use of Bitcoin assets on Ethereum has been difficult due to the lack of consistent utility and yield sources.
While assets like Wrapped Bitcoin (wBTC) exist, they are in the custody of centralized entities, making them vulnerable to censorship risks. In contrast, eBTC aims to eliminate custodial risk and allow anyone to mint it. At launch, the protocol will be significantly governance minimized, and there will be a clear path toward further decentralization and censorship resistance. The smart contracts will be immutable, and the user’s collateral or debt positions will not be controlled by any governance. However, multisig governance will operate through BadgerDAO to adjust the yield share fee earned from staked ETH collateral.
The new primitive is designed as an over-collateralized debt position that uses liquid-staked ether to borrow eBTC. Users must provide a higher value as denominated in staked ether to borrow eBTC. Chainlink’s LSD/BTC oracle will primarily determine the debt position, with Tellor as the backup oracle. The amount of staked ETH backing eBTC will be publicly available for all buyers to see and is also available on-chain.
Badger is working with RiskDAO to examine its risk exposures to different market conditions, and stability mechanisms and parameters are being explored as part of an ongoing design process. With eBTC, Badger DAO hopes to tap the asset to build a bitcoin primitive on Ethereum that does not require bridging or wrapping, thus providing a decentralized solution for Bitcoin on Ethereum.