# tBTC (TBTC) > tBTC (TBTC) is an ERC-20 token representing Bitcoin on Ethereum, fully backed 1:1 by BTC. It enables decentralized access to DeFi, utilizing threshold cryptogra... - Canonical URL: https://iq.wiki/wiki/tbtc-tbtc - Categories: Cryptoassets - Tags: Layer 2 - Created: 2024-12-09T07:58:30.328Z - Last updated: 2025-07-28T16:51:23.877Z - Source: IQ.wiki — the world's largest blockchain and crypto encyclopedia (https://iq.wiki) --- **tBTC (TBTC)** is an [ERC-20](https://iq.wiki/wiki/erc-20) token designed to represent [Bitcoin (BTC)](https://iq.wiki/wiki/bitcoin) on the [Ethereum](https://iq.wiki/wiki/ethereum) [blockchain](https://iq.wiki/wiki/blockchain). Each unit of tBTC is fully backed by one Bitcoin, with a 1:1 collateralization ratio. The protocol provides a decentralized and permissionless bridge between Bitcoin and Ethereum, enabling Bitcoin holders to interact with Ethereum's [decentralized finance](https://iq.wiki/wiki/defi) (DeFi) ecosystem without reliance on centralized intermediaries. tBTC is part of the [Threshold Network](https://iq.wiki/wiki/threshold-network), which combines cryptographic and privacy-preserving technologies. [\[1\]](#cite-id-hM8RBbCvoV) [\[3\]](#cite-id-cLA51u2Vd2) ## Overview tBTC facilitates interoperability between [Bitcoin](https://iq.wiki/wiki/bitcoin) and [Ethereum](https://iq.wiki/wiki/ethereum) by allowing users to mint an Ethereum-compatible token (tBTC) that is backed by Bitcoin. This token can be used in various [DeFi](https://iq.wiki/wiki/defi) applications, including lending protocols, [decentralized exchanges](https://iq.wiki/wiki/decentralized-exchange), and [liquidity pools](https://iq.wiki/wiki/liquidity-pool). The protocol employs threshold cryptography and distributed key generation (DKG) for secure management of [Bitcoin](https://iq.wiki/wiki/bitcoin) deposits and redemptions. A decentralized network of signers ensures that the Bitcoin reserves backing tBTC remain secure and outside the control of any single entity. Signers are incentivized to operate honestly by [staking](https://iq.wiki/wiki/staking) [Ethereum](https://iq.wiki/wiki/ethereum) (ETH) as collateral, which is forfeited in the event of misconduct. [\[2\]](#cite-id-CTshic5UR9) [\[3\]](#cite-id-cLA51u2Vd2) [\[4\]](#cite-id-HFPINHEWpd) [\[5\]](#cite-id-infF3kjuWu) ## History tBTC was developed by Thesis, a software firm also responsible for creating the [Keep Network](https://iq.wiki/wiki/keep-network). Thesis, founded by [Matt Luongo](https://iq.wiki/wiki/matt-luongo) and [Corbin Pon](https://iq.wiki/wiki/corbin-pon), aimed to create a decentralized bridge to enable [Bitcoin’s](https://iq.wiki/wiki/bitcoin) integration into [Ethereum](https://iq.wiki/wiki/ethereum)-based applications while preserving the core principles of decentralization. The first version of tBTC launched in 2020 but was temporarily suspended due to a discovered vulnerability. The subsequent release, tBTC v2, was launched under the [Threshold Network](https://iq.wiki/wiki/threshold-network), which merged the capabilities of the [Keep Network](https://iq.wiki/wiki/keep-network) and [NuCypher](https://iq.wiki/wiki/nucypher). This iteration addressed earlier challenges and provided a scalable, decentralized alternative to centralized [Bitcoin](https://iq.wiki/wiki/bitcoin) tokenization solutions like [WBTC](https://iq.wiki/wiki/wrapped-bitcoin-wbtc). [\[3\]](#cite-id-cLA51u2Vd2) [\[2\]](#cite-id-CTshic5UR9) [\[1\]](#cite-id-hM8RBbCvoV) [\[4\]](#cite-id-HFPINHEWpd) [\[5\]](#cite-id-infF3kjuWu) [\[6\]](#cite-id-hL2pmOurAb) [\[8\]](#cite-id-a0KPLveqqN) ## Technology tBTC employs a range of cryptographic and decentralized mechanisms to maintain trustless operations and secure custody of [Bitcoin](https://iq.wiki/wiki/bitcoin) reserves. #### Minting tBTC 1. A unique [Bitcoin](https://iq.wiki/wiki/bitcoin) deposit address is generated through the [Threshold Network](https://iq.wiki/wiki/threshold-network) dashboard.2. Users deposit Bitcoin into this address, which is secured by a randomly selected group of signers. 2. Upon confirmation of the Bitcoin deposit, an equivalent amount of tBTC is [minted](https://iq.wiki/wiki/minting) and transferred to the user’s [Ethereum](https://iq.wiki/wiki/ethereum) wallet. #### Redemption 1. Users initiate the redemption process by sending their tBTC tokens to the protocol’s [smart contract](https://iq.wiki/wiki/smart-contract).2. The tokens are [burned](https://iq.wiki/wiki/token-burn), and the equivalent amount of [Bitcoin](https://iq.wiki/wiki/bitcoin) is released to the user’s specified Bitcoin address. #### Signers and Security * **Random Selection**: Signers are chosen through a cryptographic random beacon mechanism, ensuring impartiality and security.- **Collateralization**: Signers bond [Ethereum](https://iq.wiki/wiki/ethereum) (ETH) as collateral, which is forfeited in cases of dishonest behavior.- **Multi-Signature Custody**: [Bitcoin](https://iq.wiki/wiki/bitcoin) reserves are managed through a decentralized [multi-signature wallet](https://iq.wiki/wiki/multi-signature-wallet) system, minimizing risks associated with centralized control. #### Key Features * **Decentralization**: Custody and operations are managed by a network of independent [nodes](https://iq.wiki/wiki/node), reducing the need for centralized intermediaries.- **Trustless Operations**: Transactions and processes are governed by cryptographic protocols and [smart contracts](https://iq.wiki/wiki/smart-contract).- **Transparency**: Reserves and operations are publicly verifiable on both the [Bitcoin](https://iq.wiki/wiki/bitcoin) and [Ethereum](https://iq.wiki/wiki/ethereum) [blockchains](https://iq.wiki/wiki/blockchain).- **DeFi Integration**: tBTC is compatible with major [decentralized finance](https://iq.wiki/wiki/defi) platforms, enabling its use across lending, trading, and [liquidity provision](https://iq.wiki/wiki/liquidity-providers). ### Use Cases * **DeFi Collateral**: tBTC can be utilized as collateral in lending protocols such as [AAVE](https://iq.wiki/wiki/aave) and [Compound](https://iq.wiki/wiki/compound).- **Liquidity Provision**: It can be deposited into [liquidity pools](https://iq.wiki/wiki/liquidity-pool) on platforms like [Uniswap](https://iq.wiki/wiki/uniswap) and [Curve](https://iq.wiki/wiki/curve-finance), earning [transaction fees](https://iq.wiki/wiki/transaction-fee).- **Yield Farming**: Token holders can stake tBTC in various DeFi protocols to generate passive income.- **Stablecoin Minting**: tBTC serves as collateral for minting decentralized stablecoins, such as thUSD. ### Governance tBTC is governed by the Threshold DAO, a decentralized organization comprising holders of the [Threshold Network’s](https://iq.wiki/wiki/threshold-network) native token, T. The [DAO](https://iq.wiki/wiki/dao) is responsible for protocol updates, integrations, and operational adjustments. This governance model allows community-driven decision-making while maintaining the protocol’s alignment with decentralization principles. tBTC provides a decentralized solution for bridging [Bitcoin](https://iq.wiki/wiki/bitcoin) to [Ethereum](https://iq.wiki/wiki/ethereum), offering Bitcoin holders the opportunity to participate in Ethereum’s [DeFi](https://iq.wiki/wiki/defi) ecosystem without compromising on decentralization or security. [\[3\]](#cite-id-cLA51u2Vd2) [\[4\]](#cite-id-HFPINHEWpd) [\[5\]](#cite-id-infF3kjuWu) [\[6\]](#cite-id-hL2pmOurAb) [\[7\]](#cite-id-5t1aq0QB1e) [\[8\]](#cite-id-a0KPLveqqN)