tBTC Will Never Liquidate Your Bitcoin
24 Apr

tBTC allows users to use their Bitcoin to participate in decentralized finance projects like Maker that are built on Ethereum. Signer collateralization is a key way the project achieves this. Signers, who manage deposits and redemptions of Bitcoin on the network, are required to stake an amount of ETH that makes the cost of stealing a user’s deposit greater than the benefit (150% ETH to BTC collateralization). But while signers forfeit the ETH they stake in the event of bad behavior, users’ BTC deposits can never be liquidated.

Users’ Bitcoin is never subject to liquidation on tBTC.

tBTC does not require users to maintain a peg themselves. This contrasts with, for example, Maker which has a user-maintained peg designed so that people can lose their ETH if their collateralization falls below minimum thresholds. TBTC’s 1:1 peg with BTC is established and maintained by the network’s deposit and redemption flows, which allow the minting of 1 TBTC for each BTC deposited, and burn one TBTC for every BTC redeemed by a user.

ETH staking on tBTC is intended not to maintain a peg but to establish incentives for signers to do the right thing. ETH staking therefore actually makes users’ BTC deposits more secure, since it backstops the assets in case of theft. tBTC is designed as the safe way to use Bitcoin on Ethereum; signer staking requirements are one of the ways it does that.

Join the #tbtc Discord channel to learn more about tBTC. And join the mailing list here.