Tron’s initiative to develop a Bitcoin layer-2 solution could potentially facilitate the flow of “wrapped” USDT into the Bitcoin network. Tron founder Justin Sun revealed plans in February to integrate Tron’s tokens with the Bitcoin network through a layer-2 solution. This endeavor aims to enable seamless movement of stablecoins and tokens between Tron and Bitcoin.
Sun emphasized the significance of this integration, stating that it would not only connect TRON directly with Bitcoin but also inject over $55 billion in value into the Bitcoin network, boosting its financial vitality. A Tron spokesperson indicated that the proposed solution would likely involve creating a wrapped version of USDT, considering Tron’s substantial share of USDT issuance.
The integration is expected to attract new users to the Bitcoin ecosystem and expand its utility, especially in decentralized finance applications. Sun highlighted that a Bitcoin layer-2 solution would enable Tron-based tokens to interact seamlessly with Bitcoin. In the interim, Tron plans to utilize existing cross-chain protocols to bridge USDT and other tokens between Tron and Bitcoin, along with collaborating with various Bitcoin layer-2 protocols.
However, the discontinuation of USD Coin minting on Tron by Circle in February poses a potential obstacle. Nevertheless, Tron cited the growing community interest in enhancing Bitcoin’s functionality and scalability as a driving force behind its layer-2 solution initiative.
In addition to improving Bitcoin’s price dynamics by denominating fees in BTC, Tron’s decentralized autonomous organization, Tron DAO, aims to develop user-friendly tools and wallets to support Bitcoin-based Ordinals and BRC-20 tokens. Looking ahead, cryptocurrency investment firm CoinShares anticipates the emergence of a Bitcoin-based stablecoin in 2024 that could rival existing stablecoins in terms of speed and cost.
Notably, Liquid-based Tether (L-USDT) stands out as one of the few US dollar-denominated stablecoins currently circulating on a Bitcoin layer-2 network.
