This Op-Ed explores whether there is a way out of the centralization cycle for wrapped Bitcoin.
TLDR: The Greeks wrote about Sisyphus, forever pushing his boulder uphill, only to have it roll back down. In crypto, we continue to push Bitcoin towards decentralization, only to see the wrapped versions return to centralized hands. Is this our fate, or can TBTC break the cycle?
TBTC Is Aiming to Succeed Where Other Wrapped Bitcoins Have Failed at Decentralization
Many attempts to bridge Bitcoin with Ethereum become a Sisyphean task. We push up the hill of decentralization, only to see our wrapped Bitcoin roll back into the valleys of centralization.
Today, another boulder teeters at its peak: WBTC, with nearly $10 billion in locked Bitcoin, faces Bitgo’s transition to a joint venture with Bit Global, while the shadow of Justin Sun looms larger — a figure whose touch has turned real-time proof of Trueusd’s reserves into stone.
The pattern repeated itself with ruthless regularity. At its peak, Ren pushed a $1.48 billion Renbtc boulder up the same hill, until the Alameda acquisition finally brought it crashing down. When FTX imploded in late 2022, Renbtc’s TVL fell from $1.12 billion to $117 million in just seven days—another monument to the forces of centralization crushing users under its weight.
Open History
Every Bitcoin solution that is packaged starts with the same promise: decentralization. Yet many succumb to the same temptation: the convenience of centralization.
Renbtc’s promising Darknode network — a system for minting wrapped Bitcoin — had a serious flaw at its foundation: the Ren group controlled all Darknodes from the get-go. This initial concentration of power created an inevitable path to corporate capture, culminating in the Alameda acquisition and eventual collapse.
The architectural choices tell different stories: WBTC has established dominance through centralized public custody. Meanwhile, Binance’s variant BTCB has never pretended to be anything but centralized, peaking at over 42,000 BTC before regulatory headwinds kicked in. TBTC, by contrast, distributes power across its network through threshold cryptography from day 0—an architecture that makes it mathematically impossible to capture.
The gravity of centralization
The pull toward centralization manifests itself in predictable stages:
Promoting Decentralization: Projects start by emphasizing trustlessness and decentralization. Renbtc’s marketing promises that their Darknode network will uphold the principles of decentralization.
The Uphill Battle of Compromise: As adoption grows, the pressure is on to streamline processes. The initial compromises seem small — a custody solution here, a trusted party there. For Renbtc, this was demonstrated when the Ren Protocol team embraced Alameda’s support, believing it would drive growth.
Peak adoption: Success benefits the company. Venture capital arrives with promises of scale. The fate of the protocol increasingly lies in fewer hands. Renbtc’s decline begins as Alameda consolidates its influence over Darknode infrastructure, centralizing control of the system.
An Inevitable Collapse: Eventually, the centralized structure fails. Renbtc’s collapse came just 7 days after FTX’s bankruptcy, with TVL dropping from $1.12 billion to $117 million.
After the collapse of FTX and Alameda, Renbtc users found themselves stranded, their assets locked in a system that failed to deliver on its original promise. Now WBTC is showing similar warning signs, with nearly $10 billion in the shadow of Bitgo’s transition and Sun’s growing influence.
Today's spurs
The current state of WBTC tells a fascinating story. Justin Sun, the founder of Tron with a track record of both innovation and controversy, is now casting a long shadow over the future of WBTC with his involvement in custody operations.
That’s right — he was recently elected Prime Minister of Liberia, but that doesn’t mean we should trust Justin Sun. His past actions, like suspending real-time proof of reserves for Trueusd, highlight a model where transparency and decentralization can be compromised for strategic advantage.
WBTC's Precarious Position:
Over $9 Billion TVL at Risk
Consolidation of custody under contested entities
Transparency mechanisms under threat
Increased risk of centralization
Bitgo, a well-known cryptocurrency custodian, initially engaged WBTC to handle the underlying Bitcoin assets. With the planned transition to a joint venture involving Bitgo, Bit Global, and Justin Sun, there is a change in how custody is managed. This mirrors the old patterns we have seen before:
Control shifts to jurisdictions with lighter oversight
Involvement of Controversial Figures in the Crypto Space
Reduced transparency and reporting
As WBTC’s boulders approach an unknown peak, the entire crypto community faces a familiar choice. Continue pushing the same weight up the same hill, or embrace a fundamentally different approach.
Breaking the myth
The hill of decentralization is still steep, but perhaps we've been climbing it wrong. What if the answer isn't to push harder, but to push differently?
Threshold's TBTC approaches the problem by staying true to Bitcoin's values: instead of rolling a single boulder up a hill, distribute the weight across a distributed network. Threshold's approach:
Child custody remains truly decentralized through threshold cryptography
Transparent and verifiable operations on-chain
No single entity can compromise the system
Bitcoin's Core Principles Remain Intact
While Renbtc faltered at the concentration of control in Alameda’s hands and eventually succumbed to centralization pressure, TBTC took a completely different approach. Here’s how:
Truly Decentralized Custody: Unlike Renbtc, which relies on Alameda’s centralized influence after the acquisition, TBTC ensures custody remains decentralized through threshold cryptography. No single party, corporation, or entity controls the locked Bitcoin.
On-chain transparency: Renbtc lacks transparency, especially after the Alameda acquisition. With TBTC, all operations are verifiable on-chain, ensuring users can track and verify Bitcoin reserves in real-time. TBTC offers what Renbtc ultimately cannot - transparency as a trustless protocol.
No single point of failure: Renbtc’s failure stemmed from its reliance on centralized infrastructure, making it vulnerable to Alameda’s failure. In contrast, TBTC’s architecture distributes responsibility across a large network of over 537 miners and 260 distributed nodes. Even if a subset of these nodes fail, the system continues to operate, maintaining Bitcoin’s decentralization.
Growth is Community First: Renbtc’s compromise comes as it seeks rapid growth through Alameda’s backing. TBTC’s growth has been steady, fueled by adoption within the decentralized finance (defi) community itself.
Perhaps Sisyphus would appreciate the irony. Sometimes victory comes not from overcoming the pain, but from realizing that the rock itself was the problem.
The question for us is: will we continue to push against the same boulder, or cross the threshold without sacrificing our values? The choice is ours, and it determines not only the future of Wrapped Bitcoin, but of decentralization itself.
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