BoringDAO Token is the asset minted by BoringDAO, abbreviated as oToken. The oToken follows the ERC-20 Token standard which enables the wrapped assets to enter the Ethereum DeFi world.
In this chapter, let’s take BTC as a typical example. The oToken minted by BoringDAO is an ERC-20 token backed by BTC and thus is named “Boring BTC”, abbreviated as oBTC. The marketing prices of these oBTC reflect the values of Bitcoins backing them.
Alice needs to bind her Bitcoin address and Ethereum address through a smart contract, and then transfers x BTC assets to a designated multi-signature custody address.
The asset custodians confirm the receipt of the asset and then mint x oBTC (equivalent to x BTC value) on the Ethereum.
The asset custodian transfers x oBTC to Alice’s ETH address and charges 0.2% fee and extra network fees of the asset value as minting fee.
The minting process is shown in Figure 1:
Figure 1: Minting Flow Chart
If Alice requests to redeem oBTC back to the original BTC asset, she uses a wallet such as metamask to burn x oBTC with a specific smart contract and she pays for 0.2% of the asset value as redemption fee in BOR.
The asset custodians listen to the smart contract event to obtain the burn information.
After reaching a consensus between the multi-signatures, they transfer x btc to the address of Alice.
The redemption process is shown in Figure 2:
Figure 2: Redemption Flow Chart