Nomic, a layer-1 blockchain, has introduced testnet support for Ethereum in its decentralized Bitcoin custody framework as of September 12. This enhancement will enable users to seamlessly on- and off-ramp Bitcoin (BTC) on Ethereum without relying on centralized custodians.

The platform’s native nBTC can serve as a substitute for Wrapped Bitcoin (WBTC), which is often backed by Bitcoin reserves held by a custodian.

Streamlining BTC DeFi Operations

nBTC represents a trust-minimized approach for integrating Bitcoin into decentralized finance. It holds the potential for future use across various Ethereum Virtual Machine (EVM)-compatible chains. Matt Bell, CEO of Turbofish, a key contributor to Nomic, stated:

“Bitcoin is the highest-value crypto asset, and Ethereum is the leading DeFi ecosystem. It’s essential to transcend the existing centralized and cumbersome BTC-on-Ethereum solutions, facilitating a comprehensive integration of Bitcoin into DeFi.”

Users can exchange Bitcoin for nBTC, which is secured by Nomic’s decentralized BTC reserves. Additionally, nBTC is part of the Cosmos ecosystem, allowing transactions across Cosmos and any chains compatible with Cosmos’ Inter-Blockchain Communication protocol.

Limited Options for BTC in DeFi

Prior to the introduction of nBTC, WBTC and tBTC were the main options. tBTC, originally generated by the Keep network, secured data through multiparty computation, distributing it across smart contracts among designated “signers.” In 2022, Keep and NuCypher merged to form Threshold.

In August, BitGo revealed its decision to transfer WBTC custody to a new collaboration with BiT Global, while maintaining the multisignature technology that ensures security. This move sparked controversy due to Justin Sun’s involvement in the partnership.

Shortly after, Threshold suggested replacing WBTC’s centralized custody and mint/burn model with the open mint-and-redeem system similar to that of tBTC. This proposal would effectively place WBTC under Threshold’s control.

Another earlier option, renBTC, was managed by Alameda Research but became unavailable when the platform shut down following the collapse of FTX.