Upload CosmWasm WBTC Contract

Proposal Discussion DApps / Tooling
1

Passing this proposal will upload the WBTC CosmWasm contract to the Osmosis chain and recognize WBTC minted through this contract as the Canonical version of WBTC on Osmosis as the most native version.

Details

WBTC brings Bitcoin liquidity to Defi by providing a token usable in smart contracts, backed 1:1 with Bitcoin verifiably held by a community of Custodians.

As an ERC-20 token on Ethereum, WBTC has allowed Bitcoin liquidity to be used across DeFi use cases rather than being restricted to trading on Centralised Exchanges.

This contract enables the WBTC issuance and redemption process as a native token on Osmosis.

Website: https://wbtc.network/

Contract Details

The WBTC contract allows the issuance and redemption of WBTC according to Bitcoin present in the custodian’s wallet on the Bitcoin blockchain at the request of merchants.

Merchants perform key roles for the WBTC community as administrators who initiate the process of minting newly wrapped tokens and burning wrapped tokens which is performed by the Custodians

The custodian provides reliable, institutional-grade security for your WBTC. All WBTC issued will be fully backed and verified through on-chain proof of reserves.

The addition and removal of merchants and custodians for WBTC on Osmosis will be an open process controlled by a multi-signature contract. Keys to the multi-sig contract will be held by institutions as part of the WBTC DAO

Oak Security has audited the contract, which can be viewed here: https://github.com/oak-security/audit-reports/blob/master/Osmosis%20Labs/2023-08-18%20Audit%20Report%20-%20CosmWasm%20WBTC%20v1.0.pdf

Contract Information

Release Version: V1.0.0

Git Commit ID: 876f865e0b06e519384808efe84ee906d8746c05

Code Location: GitHub - osmosis-labs/cw-wbtc: Wrapped Bitcoin CosmWasm contract.

Compiler Version: cosmwasm/workspace-optimizer:0.14.0

Checksum: f6dccc84a35b3ddc8b289ca45564eee15b3c76d1eeb8807ab2763dd83787a9fe

Canonical Status

As part of this proposal, Osmosis recognizes the WBTC minted via this contract as the canonical version of WBTC on Osmosis.

Canonical status sets the following agreement:

Default Asset List

Assets will be unprefixed in the app.osmosis.zone default asset list, e.g. WBTC with all other bridges’ assets being bridge1WBTC, bridge2WBTC, etc. Osmosis DAO requests that allied/friendly front-ends do the same, though any front-end is free to make its own decisions.

Osmosis Incentives

The DAO commits to prioritizing the Canonical Bridge assets, incentivizing them earlier and more heavily than the comparable assets of non-canonical bridges. In general, canonical pools should earn substantially more incentives per dollar of liquidity than their counterpart pools–under the base incentives model, not necessarily counting external incentive matching.

This proposal does not directly impact the incentives currently provided to the axlWBTC/OSMO pool (712), which will be reallocated in a future proposal.

Target On-chain date: 30th August 2023

1 Like
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Hugely in favor of this.

BTC is the biggest, most heavily traded crypto token in the world. And wBTC is the biggest, most trusted onchain version of BTC. wBTC would be a great way to grow Osmosis!

But I’m curious - when will the first real wBTC be minted? Will there be a long process of testing after this contract is uploaded, or will wBTC first be minted on Osmosis in September?

1 Like
3

In what sense will this differ from the bridged wBTC? Because in the end it is still the same BTC?

And how do we want to deal with this (looking ahead) when nomic will launch their IBC-enabled BTC-bridge for nBTC?

4

It is, but Rather than
Ethereum → Axelar → Osmosis
it is just
Osmosis
which has far less reliance on other chains.

Likely WBTC would still exist, as you get WBTC and BTC listed on centralised exchanges separately. The array of decentralized BTC bridges is a use for Alloyed Assets.

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5

But where is the underlying collateral stored?

In essence for wBTC there is a collateral locked somewhere to ensure we do not create an additional 21 million BTC, but that 1 BTC is taken out of circulation to create 1 wBTC.

Is that the case here as well? Otherwise we are just printing money (which kinda is against where BTC started)

1 Like
6

On the Bitcoin chain, WBTC is fully collateralized by the custodians: Wrapped Bitcoin ( WBTC ) an ERC20 token backed 1:1 with Bitcoin

It’s actually really transparent, I was crawling through all the wallets during the depeg scare last year :slight_smile:

1 Like
7

I know the working indeed, I was more looking towards whether the CosmWasm wBTC contract on Osmosis would work exactly equal like on ETH.

And that 1 BTC which is used to mint wBTC on Osmosis is not also used to mint wBTC on Ethereum, because in that case we break the system ^^

8

It will be treated separately and exactly equal. We are the 3rd chain here in fact, Tron being the second outside Ethereum. Won’t be duplicating the worth or each WBTC would be worth 1/2 or 1/3 of a BTC

2 Likes
9

Thanks for this reply. This was exactly what I was searching for!