3-in-1: How tBTC is an ERC-20, ERC-721, and Stablecoin

2020-05-06

tBTC allows people to act on the Ethereum blockchain using Bitcoin. tBTC is minted when a user provides proof of their BTC deposit, and it can be thought of as simultaneously three types of tokens: an ERC-20 token, an ERC-721 token, and a stablecoin.

tBTC is a standard ERC-20 token that can act on the Ethereum blockchain. ERC-20 is the common technical standard for all Ethereum tokens, which allows them to communicate and interact with one another.

tBTC is also interchangeable with the tBTC Deposit Token (TDT) through a contract called the vending machine, which manages the exchange of TDT for tBTC and vice-versa.

  • Given a TDT, it will mint tBTC.
  • Given tBTC, it will burn it and return a specific TDT.

Read more about TDTs and the vending machine here.

A TDT is a non-fungible ERC-721 token (NFT) that represents a claim to a deposit’s underlying UTXO on the Bitcoin blockchain. ERC-721 differs from ERC-20 in that these assets are not fungible. Think of a TDT like the ticket from a strict coat check: without it, you can’t get your BTC back.

Because tBTC is interchangeable with TDT, they can be considered two states of the same fundamental asset.

Finally, tBTC is a Bitcoin stablecoin: it is fully backed by BTC at a rate of 1:1. Because users must deposit BTC in order to mint tBTC, there is always enough Bitcoin locked in the network to support this. tBTC functions as a stablecoin for Bitcoin similarly to how MakerDAO’s DAI functions as a stablecoin for USD.

Join the tBTC mailing list for project updates, and ask questions on the #tbtc Discord channel.

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