Rollup layer BitcoinOS has integrated with Arbitrum One, paving the way for trustless bridging between Bitcoin and Ethereum, the company said.
Abritrum’s plugging into BitcoinOS means that transactions on Ethereum can ultimately be settled using Bitcoin, while conversely Bitcoin owners will be able to put their BTC to work within the Ethereum ecosystem.
This opens the door to substantial growth in Bitcoin-based DeFi, with core contributor Edan Yago suggesting that BitcoinOS’s solution provides the first ‘true’ example of Bitcoin DeFi.
He tells Decrypt, “All existing forms of bridged Bitcoin, like Wrapped Bitcoin (WBTC) require users to trust a multisig controlled by a handful of companies who can collude and steal your money at any time.”
Because the BTC secured via the BitcoinOS Grail bridge will be non-custodial and therefore under the full control of owners, Yago suggests that the new integration “will likely be trusted by far more people and capital than all previous Bitcoin solutions.”
And what’s particularly exciting about the integration for Yago is that, because Arbitrum is already the largest Ethereum-based layer-two network (according to L2BEAT), it will become the largest Bitcoin L2 network “overnight.”
The Arbitrum Foundation also has big ambitions for the integration, with Head of Partnerships Nina Rong suggesting that a substantial portion of Bitcoin’s circulating value could end up being plugged into the Arbitrum-based ecosystem.
“We’re excited to see BitcoinOS leverage our network to unlock the massive $2 trillion Bitcoin liquidity pool for DeFi and smart contract applications,” she said in a press release.
Up until now, anyone wanting to use Bitcoin for DeFi purposes would have had to convert their holdings into WrappedBTC, which currently has a cap of $12.6 billion, or roughly 0.65% of BTC’s current value.
Yet as BitcoinOS contributors such as Yago allude to, receiving WBTC involves entrusting your BTC to a third-party custodian, which in the case of WrappedBTC is BitGo.
And BitGo has entered some degree of controversy in recent months, first with its announcement in August of a partnership with the Justin Sun-affiliated BiT Global, and then with its legal challenge against Coinbase’s delisting of WBTC in December.
Now may therefore be a suitable time to launch a non-custodial alternative, with BitcoinOS and the Abitrum Foundation believing that their integration is that alternative.
Edan Yago – who is also the co-founder and CEO of BitcoinOS developer BTC OS – goes even further, telling Decrypt that he believes Bitcoin-based DeFi will “erupt like a hockey stick in the next two years,” with the Ethereum- and Arbitrum-based DeFi ecosystems likely to witness similar growth spurts.
In his view, this is because Bitcoin holders are finally gaining access to the decentralized apps and ecosystem “they’ve spent 15 years starving for.”
Edited by Stacy Elliott.
