[TEMP CHECK] Onboard WBTC to Avalanche and BNB Chain
Author: BitGo
Date: 2024-10-30
Summary
This proposal aims to onboard WBTC to Aave V3 on Avalanche and BNB Chain now that the asset is deployed natively on these networks. Building on the success that Aave and WBTC have had together on Ethereum, this is an opportunity for the DAO to establish itself as a primary home for WBTC across multiple networks.
Background / Motivation
Aave is the leading use case for WBTC on Ethereum today. With nearly $2.5 billion of WBTC currently deposited in Aave, it is also the DAO’s fourth-largest asset by total value supplied. Given this strong relationship between both communities, we are eager to expand this partnership to further WBTC’s utility across chains.
To initiate our cross-chain strategy for WBTC, BitGo has worked with the broader community to deploy native versions of the asset on BNB Chain and Avalanche, leveraging LayerZero’s Omnichain Fungible Token (OFT) standard. With this implementation, WBTC can now move freely across integrated chains via a burn-and-mint mechanism, while cross-chain message passing is securely facilitated by a decentralized verifier network (DVN) configured by BitGo. In this setup, every cross-chain asset transfer requires verification by BitGo, along with an optional verifier - either LayerZero Labs or Polyhedra.
Following these native deployments on BNB Chain and Avalanche, we are now excited to collaborate with the Aave DAO to onboard WBTC on these networks. Aave currently serves as the primary home for WBTC on Ethereum, and our goal is to replicate this success across other networks where Aave is expanding.
Benefits to Onboarding WBTC
- Growth in Market Share
WBTC is the largest Bitcoin-backed ERC-20 token by market cap, significantly surpassing Binance’s BTCB and Avalanche’s BTC.b, both of which are among Aave’s most heavily supplied collateral assets on their respective networks today.
Now that WBTC is natively deployed on BNB Chain and Avalanche, we anticipate users migrating their assets from Ethereum in search of diverse ecosystems. Onboarding WBTC provides Aave with an opportunity to expand its market share on these networks, where the DAO has previously been underexposed.
- Asset Diversity
Currently, Binance’s BTCB is the only Bitcoin ERC-20 supported by Aave on BNB Chain, and BTC.b is the only equivalent supplied on Avalanche. Adding WBTC as a collateral type on Aave would therefore enhance asset diversity, providing users with another tokenized Bitcoin alternative to deposit and borrow against.
Specification
Risk Parameters will be provided at ARFC stage if this proposal passes TEMP CHECK Snapshot.
Next Steps
- If consensus is reached on this TEMP CHECK, escalate this proposal to the Snapshot stage.
- If the Snapshot outcome is YAE, escalate to ARFC stage.
- Publication of a standard ARFC, collect community & service providers feedback before escalating proposal to ARFC snapshot stage.
- If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal.
Copyright
Copyright and related rights waived via CC0.