Tron’s Bitcoin layer 2 plan could see ’wrapped’ USDT flow into Bitcoin

Layer-1 blockchain Tron is considering a Bitcoin layer-2 solution that would support a “wrapped” version of Tether (USDT), potentially allowing billions of dollars of liquidity to flow into the Bitcoin ecosystem.

In February, Tron’s founder, Justin Sun, announced a roadmap for Tron’s Bitcoin layer 2 solution in an X post, which would allow stablecoins and tokens to move between between Tron and Bitcoin.

“This integration will not only link TRON directly with Bitcoin but also facilitate access to over $55 billion in value to the Bitcoin network, thereby injecting financial vitality into Bitcoin,” said Sun at the time. 

Speaking to Cointelegraph, a Tron spokesperson said the plans would “likely” involve creating a wrapped version of USDT. The Tron network is currently home to more than half of USDT’s $104 billion issued across multiple blockchains. 

“As the home of leading stablecoins like USDT, we bring significant liquidity and stability to the table,” Tron told Cointelegraph on Feb. 22.

The integration would likely attract new users to the Bitcoin ecosystem and expand the network’s use cases, particularly in decentralized finance, they added.

Sun said a Bitcoin layer 2 solution would allow TRON-based tokens to interact and interoperate with Bitcoin “seamlessly.”

“[It will aim to] maintain the speed and low fees of POS systems while ensuring the safety of POW & UTXO in conjunction with BTC L2!”X post from Tron’s Justin Sun. Source: X

The Tron spokesperson said the plan is only in its concept phase but will “likely” go ahead.

For the time being, the firm will leverage existing cross-chain protocols to bridge USDT and other tokens between Bitcoin and Tron. Part of Tron’s plan also involves collaborating with several Bitcoin layer 2 protocols.

Tron’s three-step plan toward building a Bitcoin layer 2 solution. Source: X

A rival stablecoin to Tether, USD Coin (USDC), could be a different story as Circle, its issuer, ceased minting USDC on Tron in February.

The Tron spokesperson said a recent surge in community interest to expand Bitcoin’s functionality and scalability was one of the…

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