The DeFi community has long been concerned about the security of Wrapped BTC bridges. Ethereum co-founder Vitalik Buterin once expressed concerns over possible losses in 2020. When news emerged that FTX had become the latest crypto exchange to collapse and file for bankruptcy, such warnings came to the mind of many.
The once towering exchange with a valuation of over $20 billion was reduced to nothing in a few days. FTX’s decline highlights why decentralized projects such as the Wanchain bridge are a great solution for bridging tokens. Platforms with exposure to FTX are currently counting their losses. For example, Sollet Bitcoin (soBTC), or Solana “Wrapped Bitcoin“, a Solana-based crypto asset tied to the price of bitcoin, saw a huge decline in value over the weekend.
The wrapped BTC, which ought to be backed 1-to-1 with bitcoin, traded below its BTC peg on Friday. Few in Solana’s DeFi networks were surprised that the price of the wrapped bitcoin went down the drain with FTX. Many users had long posited that FTX and Alameda did not have the bitcoin backing the soBTC they were supposed to keep on behalf of wrapped users. FTX was the custodian and issuer of soBTC so we know where that BTC is. Gone.
Bitcoin is not native to Solana. And FTX was the only place traders could redeem their soBTC for actual Bitcoin. So, when FTX halted withdrawals, soBTC holders were left stranded. The situation spells a bigger problem for the crypto community.
The Third Party Challenge
Cross-chain transactions often take place on exchanges and third-party platforms. These third-party platforms provide custodian accounts. And if the FTX saga had any lesson, it is that one should avoid custodians and go trustless whenever possible. When not possible, you need a reliable and trusted third party. Users could lose their funds and investment if things go wrong on these custody platforms.
The old mentality was “Knowing and trusting the platform you are bridging with is the only way”. But that won’t prevent another FTX story. The new mentality, which is a good reminder for everyone, is that we should go trustless so we do not have to know or trust.
Although no one saw the FTX situation coming, bridging with a decentralized non-custodial solution has always been a secure alternative. And in terms of decentralization and interoperability, Wanchain ranks amongst the highest.
Wanchain is a decentralized blockchain interoperability solution. The platform’s vision is to connect the world’s isolated blockchain platforms. Wanchain is also the only platform that facilitates truly decentralized cross-chain transactions between isolated heterogeneous blockchain networks.
Wanchain’s cross-chain service already supports Ethereum, Binance Smart Chain, Moonriver, Bitcoin, XRP Ledger, Polkadot, Avalanche, and EOSIO. Additionally, Wanchain offers the first decentralized direct bridge connecting Bitcoin and Ethereum. That means no custodian.
Wanchain bridges are direct, decentralized, and non-custodial. They connect both EVM and non-EVM networks. Simply, Wanchain uses the most secure protocols, making sure its bridges are safe. Wanchain also allows users to conduct private transactions.
Bridge Native USDT & USDC For Native With Wanchain
Wanchain recently announced the launch of the ‘XFlows’ cross-chain bridge upgrade. The XFlows will change how USDT & USDC trades against other top tokens. It brings native-to-native USDT or USDC cross-chain transfers for Polygon, BNB Chain, Ethereum, OKC Arbitrum, and others.
Centralised solutions: ⛔️
— Wanchain (@wanchain_org) November 17, 2022
Centralized exchanges were the easiest way to move USDT. But Wanchain has changed all that. Wanchain’s cross-chain bridges power XFlow. It offers a unique experience in line with existing cross-chain bridges. Find more details about the XFlow USDT bridge in this release.
Finally, using Wanchain comes with a series of perks. But most importantly is that the cross-chain bridge heralds decentralization and prioritizes security.
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