Threshold Network has launched a fee exemption mechanism for $T stakers to enhance the capital efficiency of its decentralized Bitcoin (BTC) bridge, tBTC.
This update allows users who lock $T tokens to offset the bridge costs, effectively removing the 20 basis points redemption fee that previously hindered arbitrage and liquidity.
By linking the use of the protocol to the staking of the native token, the network aims to stabilize the 1:1 peg between tBTC and native Bitcoin.
The system operates on a rolling window of 30 days, where every 100,000 $T staked allows for the removal of fees for 0.001 tBTC of mint or redemption activity.
Reduce the 'redemption drag'
While the minting of tBTC remains free, the protocol traditionally charges redemption fees of up to 20 basis points to support the security of the infrastructure.
This cost often created a slight discount for tBTC in secondary markets, with market makers accounting for the expense needed to convert the asset back to Bitcoin.
The new exemption system allows active participants to fully neutralize these costs through proportional staking.
The co-founder of Threshold, MacLane Wilkison, stated on social media that the mechanism is designed to ensure that tBTC tracks Bitcoin without the persistent discount attributable to bridge fees.
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Market efficiency and arbitrage
The implementation targets high-frequency users, including market makers and institutional arbitrageurs, who manage large-scale Bitcoin flows across DeFi.
Better arbitrage efficiency generally leads to tighter spreads and deeper liquidity on decentralized exchanges, benefiting even users who do not stake $T tokens themselves.
Unlike centralized alternatives, tBTC relies on threshold cryptography and a set of distributed signers rather than a single custodian.
This update strengthens this decentralized model by incentivizing long-term holders to precisely provide the security and liquidity that the protocol needs to scale.
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