So you bought a bitcoin…
Bitcoin is all over the news these days. Like many savvy investors you might already have purchased Bitcoin a long time ago and you have been faced with one ugly truth.
There’s really not much you can really do with a Bitcoin.
The network is slow, you have to rely on centralized services to trade and there are no smart contracts on the BTC network
What are smart contracts? They are blockchain code that can be interacted with by users. they are the backbone of all the DeFi phenomenon.
Decentralized Finance allows people to be their own bank. They can gain interest on their assets, get loans and trade without having to relinquish control of their tokens.
For Bitcoin to participate in these protocols it needs to be wrapped into the Ethereum chain in order to be compatible. A wrapped token is really a IOU that is emmited into the Ethereum network for every BTC deposited into a wrapper protocol.
Current Bitcoin wrapper protocols such as WBTC and renBTC rely on multisig setups to hold the BTC. This poses a security risk because Bitcoin multisigs are capped to around a dozen signers. This means that there is a real possibility of them colluding to remove the undelying value of the wrapped BTC, causing the loss of the peg and value collapse.
The strudel protocol adresses this issue by achieving a trustless BTC wrapper. You do not have to rely on a group of people to hold the keys to the Bitcoins, because the wrapping procedure burns the BTC in order to create a vBTC which is fully compatible with the Ethereum ecosystem.
Besides giving investors peace of mind that a vBTC will always represent the same ammount of BTC, the strudel wrapper allows vBTC to be used in new ways, such as flash loans. Although the average investor may not be aware of what a flash loan is, this tool is on the forefront of DeFi innovation, and the strudel protocol allows BTC to be used very creatively to generate even more value.
Currently the price of vBTC is below the intended peg. This presents an interesting opportunity to acquire BTC at a 90% discount. The latest version of the protocol will maintain a stable peg once the average trading volume reaches a critical mass point to self sustain.
Once the peg is achieved arbitrage between BTC and vBTC can happen consistently, this will allow holders to trade their vBTC back to BTC at a 1:1 ratio if they so desire while increasing the ammount of bitcoins locked in the ethereum ecosystem. Enter the strudel and join the party.
