Hi Friends,
Welcome to my guide on how you can mint TBTC using testnet Bitcoins so that you can...
- Earn rewards in Playing for KEEPS (Month 3 - July 2020).
- Help KEEP bring Bitcoin into Ethereum in a decentralised way.
This guide is divided into three parts, and you get to choose to skip ahead if you already got a specific part covered.
- Why are we Playing for KEEPS
- How to setup the tools you require
- How to mint TBTC using testnet Bitcoins
1/ Why are we Playing for KEEPS
I love Bitcoin.
Bitcoin is maturing as a resilient digital asset for storing value. Because of its absolute scarcity that only 21 million BTC shall ever exist, it shares characteristics with physical gold thus is contending to become a unique digital version of gold. This is one of many reasons why Bitcoin's value has high upward potential over the long term.
There is one caveat though. Once you understand Bitcoin... HODL-ing Bitcoin can be extremely boring.
Things are getting exciting, however, thanks to Decentralised Finance (DeFi) applications emerging particularly in the Ethereum ecosystem; namely:
| Platform | What you can do with your Bitcoin |
|---|---|
| Compound | Earn interest on your Bitcoin |
| Aave | Earn interest on your Bitcoin |
| MAKER | Collaterise your Bitcoin to get a loan (currently 0% interest) |
| Uniswap | Add liquidity into a trading pool and earn fees. |
| Curve | Add liquidity into a trading pool and earn fees. |
Problem is... Bitcoin and Ethereum are two different blockchains. This means you can't use Bitcoin directly on Ethereum dApps e.g. deposit Bitcoin into Compound.
We need a way to bring Bitcoin into Ethereum.
The existing solution is Wrapped Bitcoin (WBTC) - which relies on trusted centralised third parties to hold custody of Bitcoins and mint a 1:1 Bitcoin-backed Ethereum based token. It works...
However, the main downside with a solution like WBTC is custodians need to be fully trusted. A malicious custodian can block withdrawals and in some cases collude to abscond with funds. Sometimes, it could be insider job like what happened with the recent incident with Twitter. Custodians may also be compelled by governments, hackers, or other forces to tamper with reserves, despite their good intentions.
That is why tBTC exists.
The goal of tBTC is to allow Bitcoin owners to deposit and redeem BTC in DeFi without intermediaries..
A lot of things are happening under the hood and you can read them here. However, the short version is, tBTC decentralises the minting process involving a decentralised group of incentivised pseudonymous signers; and it could be you too 😉.
Where does KEEP come into the picture?
KEEP is a work token. To be a signer, you need to stake both KEEP & ETH tokens in order to increase your chances of being randomly selected as a signer whenever there is a new request from a depositor who wants to mint tBTC.
As a reward, a signer gets to earn a tiny portion of fees for their work done.
As of writing, my conclusion is the KEEP token would have an upward potential value when:
- Requests for tBTC minting increases
- More people want to gain more from their Bitcoin using DeFi apps
- The fees earned becomes an attractive passive income for signers
- Demand from other applications seeking for a similar arrangement of decentralised group of signers increases
Disclaimer: Bitcoin, Ethereum & cryptocurrencies are risky. None of this is financial advice. It's not for everyone and you can lose money if you make mistakes.
How to Play for KEEPS
Playing for KEEPS is an incentivized testing phase where you get a chance to learn, gain experience and win KEEP by contributing your time and effort to help tBTC bring Bitcoin into Ethereum.
In May & June, the community was invited to run either a ECDSA or Random Beacon node. Now in July, it appears we are on the final leg of the testing phase and the community is invited to start minting TBTC using testnet Bitcoins.
If you are confused by the naming convention...
tBTC is the minting and redeeming network.
TBTC is the 1:1 Bitcoin-backed ERC-20 token minted.
The rewards available are:
- You will get 200 KEEP per 1 TBTC minted.
- The program will end when we hit the 250k KEEP total cap.
- The program runs from 13 July 2020 - 28 July 2020.
You will need to fill up this form here and feedback what your user experience so that the developers can identify bugs, glitches and solve problems early.
If you are beginner and need a guide, read on and may you have a rewarding experience Playing for Keeps!
2/ How to setup the tools required for this exercise
For this section, you will need to:
- Download the Metamask Wallet extension.
- Create your Metamask Wallet.
- Connect to Ropsten Testnet.
- Get some free Ropsten Testnet ETH here.
- Download the Coinomi Smartphone Wallet app.
- Create your Bitcoin Testnet Wallet.
- Get some free testnet Bitcoin here.
Once you have completed these 7 steps, you are ready to mint TBTC using your testnet Bitcoins.
3/ Mint TBTC using your testnet Bitcoins
Firstly, check that you already have the following in place:
- You have an Ethereum wallet.
- Your Ethereum wallet is connected to Ropsten Testnet.
- You have at least 1 Ropsten testnet ETH inside your wallet.
- You have a Bitcoin testnet wallet.
- You have at least 1 testnet Bitcoin inside your wallet.
Cool. Let's now begin minting tBTC using your testnet Bitcoins.
Visit https://dapp.test.tbtc.network/.
Click Deposit.
In the next page, do the following three steps.
1/ Connect your Metamask wallet.
2/ Choose a lot size e.g. 1 BTC.
3/ Click 'Create Address'.
The tBTC system will initiate the deposit request and fetch a BTC address. Your Metamask desktop wallet will prompt you and calculate a minting cost estimate you will need to pay.
4/ Pay the gas fee (variable) + minting fee (fixed).
Notes: (1) Always check whether the gas fee you're paying for is the latest estimate at your current time for a fast transaction. (2) In this example at time of writing, the minting cost for 1 BTC ($9,500) is 0.689789 ETH ($ 170)... thus the minting cost is about 1.7%.
5/ Send 1 testnet BTC into the Bitcoin wallet address provided.
From your smartphone, launch the Coinomi app and send 1 testnet BTC to the address. The easiest way I like is via QR code.
Notes: Your Bitcoin testnet wallet would need a little bit more than 1 testnet Bitcoin to pay for Bitcoin transaction fees. These fees will be deducted from your Bitcoin testnet wallet balance.
You have sent the Bitcoin to the address. It takes about on average 10 minutes for a Bitcoin transaction to confirm. You'll just have to wait.
Once the Bitcoin transaction is complete...
6/ You'll need to show proof on the Ethereum network. This will require paying another gas fee.
7/ Once your proof is received, you'll need to approve and interact with one more Ethereum smart contract in order to receive the TBTC. This will require paying two more gas fees (Approve) & (Contract Interaction).
8/ Congratulations! You have successfully minted 1 TBTC on Ropsten Testnet.
Do fill in the form and share your experience, both good and not-good e.g. all errors received to get your KEEP rewards for the month of July.
Also important... because only 100 TBTC can be minted at anytime for this testnet... please redeem your 1 TBTC back into Testnet Bitcoin after you have complete your run so that others may also Play for Keeps.
I'm excited for Bitcoin coming into Ethereum.
As of time of writing, there is 3 days left till the due date for this testing phase.
Have a great weekend everybody!
Bonus | What can go wrong & what to do about it
The following are errors I received and how I dealt with them.
Note: Although I overcame them, I would still like more clarity from the KEEP team why caused those errors as I still do not know.
1/ Error Initiating Deposit - Transaction has been reverted by the EVM
Solution: There is only 100 TBTC available to mint for the testing phase. Others who have successfully minted TBTC will need to redeem back their testnet bitcoins so that others may mint TBTC and participate in Playing for KEEPs. Monitor the totol supply of TBTC available for minting here.
2/ Error submitting proof - gas required exceeds allowance
Solution: Refresh page, reconnect wallet and try again. It worked.
If you experience an error which does not make sense, is unique (do check if other people raise a similar issue before using keyword search), please report them by raising an issue here. You will have a higher chance of getting an answer through Github than Discord.