Tron, a layer-1 blockchain, is exploring the possibility of implementing a layer-2 solution for Bitcoin that would support a wrapped version of Tether (USDT), potentially bringing in billions of dollars of liquidity to the Bitcoin ecosystem.
In February, Tron’s founder, Justin Sun, revealed a roadmap for Tron’s Bitcoin layer-2 solution, which would enable stablecoins and tokens to be transferred between Tron and Bitcoin.
The Tron team stated that this integration would not only connect TRON directly with Bitcoin but also provide access to over $55 billion in value to the Bitcoin network, injecting financial vitality into Bitcoin.
According to a Tron spokesperson, the plan would likely involve creating a wrapped version of USDT. Currently, the Tron network hosts more than half of the $104 billion USDT issued across various blockchains.
By integrating with Bitcoin, Tron aims to attract new users to the Bitcoin ecosystem and expand its use cases, particularly in decentralized finance.
Sun stated that a Bitcoin layer-2 solution would seamlessly enable Tron-based tokens to interact and interoperate with Bitcoin.
The Tron spokesperson clarified that the plan is still in the concept phase but is expected to proceed. In the interim, the company will use existing cross-chain protocols to bridge USDT and other tokens between Bitcoin and Tron. Additionally, Tron plans to collaborate with several Bitcoin layer-2 protocols.
However, the situation is different for USD Coin (USDC), a rival stablecoin to Tether, as its issuer, Circle, stopped minting USDC on Tron in February.
The Tron spokesperson explained that the surge in community interest to enhance Bitcoin’s functionality and scalability was one of the main reasons behind considering the development of a layer-2 solution. They also noted that developing decentralized applications on Bitcoin could potentially improve Bitcoin’s price dynamics since fees would be denominated in BTC.
Tron DAO, Tron’s decentralized autonomous organization, is also working on building a user-friendly wallet and toolset to support Bitcoin-based Ordinals and BRC-20 tokens.
In January, cryptocurrency investment firm CoinShares predicted the emergence of a Bitcoin-based stablecoin in 2024 that could rival the speed and cost of other stablecoins in the industry.
Currently, Liquid-based Tether (L-USDT) is one of the few United States dollar-denominated stablecoins circulating on a Bitcoin layer-2 network.