How it Works

• Deposit BTC: Users send BTC to the designated address provided by the centralized bridge service. This BTC is typically held in custody by the bridge operator.

• Tokenization: Upon receiving BTC, the centralized bridge operator creates an equivalent representation of BTC on the Ethereum blockchain. This is achieved by issuing WBTC, which is an ERC-20 token pegged to the value of BTC.

• Smart Contract and Custody: The bridge service usually employs a smart contract on the Ethereum blockchain to manage the issuance and redemption of WBTC. The BTC held by the bridge operator is typically stored in a custodial wallet or other secure storage solutions.

• Ethereum Integration: Once WBTC is created, it can be used on the Ethereum blockchain in the same way as any other ERC-20 token. It can be traded on decentralized exchanges (DEXs), used as collateral in decentralized finance (DeFi) applications, or transferred between Ethereum addresses.

• Redemption: When users want to convert WBTC back to BTC, they initiate a redemption process through the centralized bridge service. The WBTC is burned, and the corresponding amount of BTC is sent to the user's specified BTC address.

Centralized bridges for BTC to Ethereum offer certain advantages, such as ease of use and liquidity. They provide a straightforward way for Bitcoin holders to access the Ethereum ecosystem and take advantage of various decentralized applications and services built on Ethereum. However, it's important to note that using centralized bridges introduces a degree of trust and dependency on the bridge operator, as they control the custody of BTC and the issuance and redemption of WBTC.