ShapeShift Launches Decentralized Exchange That Swaps BTC For ETH

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A fake coin
An artist's rendition of an Ethereum coin (remember that these are not real, they only exist for their aesthetic appeal). Image credit: volodymyrshtun/Bigstock.com

ShapeShift has launched a decentralized exchange that will soon be capable of exchanging unwrapped Bitcoin (BTC) for tokens outside of its own blockchain, such as Ethereum (ETH) and Litecoin (LTC). This is a significant development because most decentralized exchanges (DEX) can only exchange tokens within their own platform (for example: Uniswap can only exchange Ethereum-based tokens).

Unwrapped…what does that mean? Unwrapped refers to real BTC. Wrapped Bitcoin is a non-Bitcoin token that is backed 1:1 by Bitcoins held in the custody of a provider such as BitGold Trust. Wrapped Bitcoin tokens are almost the same price as real Bitcoins.

Founded in 2014, ShapeShift started providing non-custodial exchange functionality a long time ago. However, it wasn’t decentralized. Decentralized exchanges such as Uniswap came along and helped the concept of decentralized currency exchange take off. Uniswap is now one of the largest projects in the decentralized finance sector. The new ShapeShift DEX leverages the THORChain (which is based on Tendermint and Cosmos) to achieve the non-custodial cross-chain exchanges.

“We believe finance must be open and immutable. The THORChain team has built technology that brings these properties to the trading of bitcoin and other leading chains for the first time,” said Erik Voorhees, Founder and CEO of ShapeShift. “We saw the power of this technology and wanted to bring it to our users immediately. This is a continuation of our commitment to offer users an easy, self-custody platform for their decentralized trading needs.”

THORChain is a decentralized liquidity protocol that allows users to deposit native tokens to liquidity pools (provide liquidity to THORChain). A notable feature of this chain is that it churns nodes every 3 days to prevent capture. THORChain also has over $767 million in total capital, with over $460 million bonded. It facilitates efficient exchanges using bi-directional bridges between blockchains.