Bitcoin’s status as the oldest, most prestigious cryptocurrency comes with a slate of advantages. But its age also has drawbacks – particularly, BTC’s lack of compatibility with decentralised networks. Yesterday, the Cosmos blockchain took steps toward eliminating this issue by announcing the protocol has teamed up with blockchain bridge Nomic. Nomic will allow users to convert their BTC for a synthetic BTC token, nBTC. The upgrade is expected to be live by the 27th of October, with users able to access the Nomic bridge for Cosmos by the 30th. 

What is nBTC and How Will it Work?

According to Cosmos developers and members of the Nomic Foundation, protocol users will be able to deposit standard BTC tokens to the Nomic Bridge. For a 1.5% transaction fee, the BTC will be converted into Nomic Bitcoin (nBTC), a 1:1 token compatible with all major Cosmos ecosystem applications. nBTC can then be purchased, sold or used to mine for liquidity via Osmosis, the network’s largest decentralised exchange. 

Osmosis co-founder Sunny Aggarwal commented on the need for greater Bitcoin representation in DeFi: 

“Bitcoin is in deep need of an application DeFi ecosystem, and Cosmos is in need of a base money asset that can serve as its primary store of value. Nomic will help make this long-awaited union for a Bitcoin-centric Cosmos a reality”. 

Nomic believes that on-ramping Bitcoin users to Cosmos’ Inter-Blockchain Communication protocol (IBC) will help “tap into the supply of $500B+ worth of dormant Bitcoin”.

How Can Bitcoin Be Used in the Cosmos Ecosystem?

Giving Bitcoin a DeFi home has natural benefits – the ability to buy, sell, swap and generate income on what would otherwise be an idle asset. But Cosmos developers and partners also have some more specific use cases in mind:

DeFi network Kujira has teamed up with Cosmos and Nomic to provide a secure storage solution for nBTC. The mobile wallet, called “Sonar wallet,” has multi-chain capabilities and can even restore BTC/nBTC wallets using the same seed phrase.  

nBTC can also be used as collateral to issue USK (Kujira’s native stablecoin), or to yield from the platform’s borrowing and lending protocol.

For now, transactions using the Nomic bridge will be capped at 21 BTC. Cosmos applications will cease generating deposit addresses when the deposits exceed this figure to prevent further BTC from entering the ecosystem. The system will be governed by the Nomic DAO, which is currently conducting an audit on the bridging protocol to ensure it is a secure entry point for BTC holders.

The post Bitcoin Coming to Osmosis, Can Cosmos Become the DeFi Ecosystem for the Largest Crypto? appeared first on Crypto News Australia.

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Filed under: Bitcoin - @ October 4, 2023 2:10 am