Alloyed BTC: Adjust Static Caps for WBTC Variants

Proposal Discussion Alloyed Assets
1

This proposal would reduce the static limits of WBTC variants within Alloyed BTC on Osmosis.

The goal is to rebalance the Alloyed BTC composition by capping WBTC variant exposure at 95%, reducing reliance on centralized bridges, and encouraging the use of alternatives that may be more direct or decentralized.

Proposed Adjustment

This proposal would reduce the caps on WBTC variants within the Alloy to a total of 95%, promoting broader participation from other bridged representatives within the Alloy.

Alloyed BTC was designed to support diverse BTC representations on Osmosis, including decentralized bridges that directly connect to the Bitcoin blockchain. Reducing WBTC’s cap forces the use of alternative representations, potentially increasing the adoption of decentralized alternatives.

As this proposal results in WBTC only being able to represent 95% of the variants, at least 5% must consist of the other representatives, increasing from the current 1%.

Variant Current Usage Current Cap Proposed Cap
WBTC (native) 42.5% 100% 45%
WBTC.eth.axl 56% 75% 40%
WBTC.eth.atom 0.5% 10% 10% (unchanged)
Total WBTC limit 99% 185% 95%

These changes would effectively pause inflows for WBTC.eth.axl until alternative bridged representatives like nBTC, cbBTC, or ckBTC make up a higher share of the alloy.

Alloyed BTC

Alloyed BTC was recognized as the canonical Bitcoin on Osmosis in Proposal 813.

It currently has around 111 BTC in supply on Osmosis and consists of:

  • WBTC.eth.axl (Axelar bridge from Ethereum) (75% cap)
  • WBTC (Natively Issued on Osmosis)
  • ckBTC (Chain-Key Bitcoin via ICP) (35% cap)
  • nBTC (Nomic Bridged Bitcoin) (35% cap)
  • cbBTC (Coinbase Bitcoin via Axelar) (75% cap)
  • WBTC.eth.atom (Eureka via Cosmos Hub) (10% cap)

For a complete description of Alloyed Assets, see the Blog Post.

To view all Alloyed Statistics, see the Alloyed Dashboard.

Target Onchain Date: 31st July 2025

1 Like
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Is it not tricky to limit these caps while the aim is also to be a trading venue for BTC?
Especially since the other bridges simply do not seem to attract much activity?

I would try to avoid hurting the aim for Osmosis, simply because the alternatives for bridging BTC are lacking.

1 Like
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The main downfall of the alternatives right now is their availability as trading options on Osmosis.

The proposal to add BTC.int3 is also going live shortly to increase the options. The end to end conversion is becoming better, allowing these to be used more frequently. One other factor is that WBTC trades at a constant, but small, depeg compared to other representatives, which fluctuate or are more reliably pegged to 1 BTC. (Which charts are available on Coingecko below)

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1 Like
4

Clear! So in essence the value of our alloyed BTC should become better by limiting wBTC.

5

Posting a partial reversion as this is impacting routes in an unexpected way. Static limits should not impact other variant withdrawals as of v3.2 of the transmuter, but they still appear to be doing so.

This proposal partially reverts the lowered static limits of WBTC from Proposal 963 to implement them over a longer timeframe.

Proposed Adjustment

Proposal 963 reduced the caps on WBTC variants within the Alloy to a total of 95%. This adjustment is impacting routing through the alloy for longer than expected. Reducing the caps on alloys below the current composition should be done in a more incremental manner to ensure that routing remains functional for all pathways.

This proposal increases the static caps for:

WBTC, from the newly implemented 45% to 50% (Current usage of 44%)

WBTC.eth.axl, from the newly reduced 40% (from 75%) to 50% (Current usage of 51.5%)