Bitcoin Breaks Free from Wrapped Token Shackles with THORChain

Bitcoin's limited role in decentralized finance (DeFi) has led to the creation of wrapped Bitcoin, a token that tracks the price of BTC on other blockchains. However, this solution comes with its own set of problems.

The scripting system of Bitcoin was designed with fewer capabilities than general-purpose smart-contract platforms, making it difficult for most DeFi applications to deploy on the Bitcoin network. As a result, wrapped tokens were created as a bridge between the two environments.

Wrapped assets can fragment liquidity and introduce custodial risk, smart-contract risk, or bridge risk. THORChain, a Layer-1 cross-chain liquidity protocol, has developed a solution that connects separate blockchains at the liquidity layer without using wrapped tokens.