The number of bitcoin (BTC) bridged or ported from the Bitcoin blockchain to the Avalanche smart contract blockchain has surpassed the tally of coins held in the Lightning Network, a second-layer solution for Bitcoin's scalability problems.
On Tuesday, the total traffic flow from BTC, or BTC bridge. b, on Avalanche reached a record 5700 BTC ($118.6 million) based on data from Dune Analytics. During this time, the number of Bitcoin locked in the lightning network amounted to 4.929 BTC (100 million dollars).
The flippening has brought cheer to the Avalanche community and developers behind the project.
"Yesterday marked a pretty awesome milestone for the asset as it exceeded 5,700 in total circulating supply on Avalanche and, in only a handful of months, surpassed the current capacity of the Lightning network," Morgan Krupetsky, director of BD for institutions and capital markets at Avalanche's creator Ava Labs wrote in a blog post on Wednesday.
Avalanche added support for BTC in its cross-chain bridge in June 2022, opening the doors for bitcoin holders to transfer coins to Avalanche and access the Avalanche-based decentralized finance (DeFi) ecosystem.
To initiate BTC to Avalanche, a user sends a user sends a transaction on Bitcoin from the new Core Wallet that transfers BTC to the bridge address controlled by the SGX enclave, a trusted execution environment embedded in a process. The sgx enclave then creates or hits an amount equal to btc. b to the portfolio of the user who sent the bitcoin launch transaction.
At the time of moving btc. b back to the Bitcoin blockchain, the user sends an avalanche transaction, calling the method "unpack", that burns the btc. B tokens.
Per Krupetsky, Company of British Columbia. b is a better option than Wrapped Bitcoin for institutions or anyone seeking to earn a return per challenge on their BTC holdings.
"Many of the institutions I talk to have at least some of their assets allocated to the BTC, either as reserve assets, to diversify their portfolios or for other reasons. If you are just looking to send/ receive BTC fast and at a lower cost, obtain a passive return from your investments in the BTC, or take on them, BTC. b on Avalanche is your easy response to make it," Krupetsky said.
For the uninitiated, enveloped Bitcoin (wBTC) is the largest enveloped version of Bitcoin on Ethereum, the largest intelligent contract blockchain in the world. Wbtc is a token ethereum erc-20 which represents the bitcoin and can be traded on a 1:1 basis for btc.
"In contrast to enveloped bitcoin, CTB. b enables seamless bridge users between Bitcoin and Avalanche whenever they wish for a relatively tiny cost," Krupetsky added.
For the uninitiated, enveloped Bitcoin (wBTC) is the largest enveloped version of Bitcoin on Ethereum, the largest intelligent contract blockchain in the world. WBTC is an Ethereum ERC-20 token which stands for Bitcoin and can be traded on a 1:1 basis for BTC.
A bitcoin holder wanting to access the Ethereum database challenge must first mint the Bitcoin chip packaged called WBTC. The process is managed by the dealers like loopring, deversifi, and the depositary bitgo.
Once a BTC holder submits a wbtc application, merchants conduct verification procedures to confirm the identity of users and initiate the typing process by allowing BITGO to mint wbtc. The merchant then transfers the btc from the user to bitgo in exchange for the new wbtc, which the user can deploy in defi to generate additional output. The user's underlying bitcoin is held in confidence bitgo in separate refrigeration storage accounts.
The buyback process again involves users paying fees to the merchant, who then launches the transaction to burn wbtc and release btc from the bitgo custody.
In this case, the user cannot disengage himself and is therefore exposed to potential disruptions in the constant flow of redemptions, which can be costly during periods of market volatility.
"The issue with this (WBTC] process is that in times of volatile markets, redemptions typically do not occur on-demand causing de-pegging since a user cannot simply unwrap the BTC themselves," Ava Labs' head of DeFi Luigi D'Onorio DeMeo, tweeted.