Tron’s Bitcoin layer-2 strategy may result in the inflow of ‘wrapped’ USDT into Bitcoin.

Tron, a layer-1 blockchain platform, is exploring the possibility of implementing a layer-2 solution for Bitcoin that would support a wrapped version of Tether (USDT), potentially bringing substantial liquidity to the Bitcoin ecosystem. Tron’s founder, Justin Sun, previously outlined a roadmap for this Bitcoin layer-2 solution, aiming to enable the seamless movement of stablecoins and tokens between Tron and Bitcoin. Tron’s spokesperson revealed that the plan would likely involve the creation of a wrapped version of USDT, leveraging Tron’s significant liquidity and stability. This integration is expected to attract new users to the Bitcoin ecosystem and expand its use cases, particularly in decentralized finance. Tron envisions that a Bitcoin layer-2 solution would enable Tron-based tokens to interact seamlessly with Bitcoin. While the plan is still in its concept phase, Tron intends to utilize existing cross-chain protocols to bridge USDT and other tokens between Bitcoin and Tron. Additionally, Tron is collaborating with various Bitcoin layer-2 protocols. It’s worth noting that Circle, the issuer of rival stablecoin USD Coin (USDC), stopped minting USDC on Tron in February. The decision to explore a layer-2 solution for Bitcoin was primarily driven by the increased community interest in expanding Bitcoin’s functionality and scalability. Tron believes that developing decentralized applications on Bitcoin could potentially enhance its price dynamics since fees would be denominated in BTC. Furthermore, Tron DAO, the decentralized autonomous organization associated with Tron, plans to develop a user-friendly wallet and toolset to support Bitcoin-based Ordinals and BRC-20 tokens. CoinShares, a cryptocurrency investment firm, predicted that a Bitcoin-based stablecoin could emerge in 2024, offering speed and cost advantages over other stablecoins in the market. Currently, Liquid-based Tether (L-USDT) is one of the few US dollar-denominated stablecoins circulating on a Bitcoin layer-2 network.