1 k

What Are pTokens and Why they are so Important

As the decentralized economy expands, developers seek new and exciting ways to unlock liquidity in the blockchain sector. Among these new concepts, the pToken strategy has proven itself as a prominent technology to consider. pTokens are a type of Ethereum token that represents a 1:1 peg with another blockchain asset.

Importantly, the “p” in pTokens stands for provable, portable, and pegged. pTokens are pegged at a 1:1 basis to their underlying digital asset. This enables user access to cross-chain markets without the need to trade their token directly. This strategy is intuitive when you consider trading cryptocurrencies a taxable event in many locations, such as the US. Importantly, pTokens can support any blockchain asset.

DeFi Gains

In this way, the entire decentralized Financial (DeFi) sector gains liquidity. DeFi is a technological movement that aims to replace centralized financial systems with decentralized protocols. DeFi systems provide more security than centralized systems for many reasons, primarily because there is no central attack vector to exploit. 

The DeFi sector continues to experience record growth, and for a good reason. Its trustless and more efficient approach to traditional financial services already has $1 billion in locked value. Additionally, this movement has contributed to the development of numerous innovative financial services that were previously unimaginable.

DeFi Needs pTokens

The hype around the DeFi movement is warranted. However, for the DeFi sector to succeed, liquidity is key. Currently, the crypto market suffers from a lack of liquidity compared to traditional markets such as stocks or commodities. These markets enjoy trillions in market liquidity, whereas the crypto market has yet to break a trillion in market capitalization.

A lot of the liquidity issues stem from a lack of cross-chain interoperability. Basically, you can only work within the blockchain your asset lives on. In other words, a person that owns Bitcoin can’t partake in Ethereum’s ever-expanding ecosystem – until now.

Why pTokens are Important

Providing inter-chain operability is paramount to large scale blockchain adoption. Imagine a day when every cryptocurrency holder can take advantage of any ERC compatible Dapp. This strategy could unleash a tidal wave of new liquidity flow instantly between different blockchains. It also has the potential to make the most popular DApps accessible to anyone.


The developers behind the pToken concept started with the pBTC token. This token enabled access for Bitcoin holders to the Ethereum network in an instant and frictionless manner. The token instantly became a success as it opened Ethereum’s DeFi world to every Bitcoin holder. 


Developers recently launched the first pLTCs on July 29, 2020. The token launched officially on the Kyber Network. It enabled LTC holders to utilize KyberSwap and other decentralized apps in seconds. 

How Do pTokens Work

The pToken concept utilizes two light clients to accomplish its unique tasks. The first client involves native blockchain, in this case, Bitcoin. This client utilizes a P2SH (pay to script hash) Bitcoin address to verify your holdings and initiate the process. This client will then work with the Ethereum based protocol to “wrap” your Bitcoin in Ethereum. 

ptokens explained

You end up with an ERC-777 token that is pegged to Bitcoin at a 1:1 basis. Notably, ERC-777 tokens are an ERC-20 compatible token standard developed specifically for this task. The protocol incorporates many aspects from OpenZeppelin’s standard smart contract.

Instant Access

Insanely, the entire process takes seconds, and just like that, you granted access to Ethereum’s Dapp network. This vast community includes a huge array of decentralized exchanges and other unique and exciting platforms. Best of all, you can easily convert your pToken back to Bitcoin in seconds at its current value.

How Do I get pTokens?

There are currently two decentralized exchanges (DEXs) offering pToken support – Bancor Network and Kyber Network. Both of these platforms are reputable DEXs that provide you with streamlined trading experiences. Register for an account, and you can begin taking advantage of this intuitive protocol today.

Discussing the new protocol, the marketing manager at Kyber Network, Shane Hong, explained that his team was proud to be a part of this crucial task. He spoke on how LTC users could now easily and conveniently “explore the world of decentralized finance on Ethereum.”

pTokens are Coming

Bitcoin live price
price change

You have to hand it to this development team. They seem to halve figured out a reasonable solution to liquidity and interoperability concerns in the sector. If successful, this project could reshape the entire blockchain sector moving forward. For now, the crypto community is ready to check out these new capabilities. 

Stay up to date with our latest articles

More posts

Are Gold-Backed Tokens Worth Investing During Crypto Bear Market?

The crypto market is under the complete control of bears, investors taking short positions to profit from declining prices. In this unstable environment, new capitalists are fearful or skeptical when funding projects. Instead, they turn to more reliable assets that would not wipe out their portfolios when or if they flop. Gold-backed tokens represent a category of assets ready to provide portfolio stability and allow investors to overcome the bear market without too many losses. On the contrary, gold-pegged tokens…

The Buyback and Burn Practice Explained

In a constantly evolving and growing crypto market, it is difficult for investors to know where to put their money. One popular investment strategy in the crypto space is buying tokens of teams that conduct a buyback and burn program.  This guide will explore what a buyback and burn practice is, how it works, and its benefits and risks. What Is a Crypto Buyback and Burn Practice A crypto buyback and burn practice happens when a company buys back its…

Should You Sell Off Your Crypto Assets During a Bear Market?

Selling your crypto assets during a bear market can be a hard choice. On the one hand, selling off your assets may seem logical during a down market. On the other hand, you may be worried about missing out on potential profits if the market rebounds.  This guide will illustrate the benefits and risks of selling off your crypto assets during a bear market. While you should always do your own research, we will also share some tips for doing…

Why Do Some Crypto Projects Issue More than One Token?

In recent years, the popularity of cryptocurrency has exploded. As a result, more and more people are looking to invest in crypto projects. However, not all projects are equal, and it can be challenging to determine which ones are worth investing in. This guide aims to help investors make informed decisions about which crypto projects to invest in. It will explain multi-token models and why they have become so popular among crypto projects.  The guide will also outline the benefits…

How to Spot a Crypto Project with Great Tokenomics?

In the cryptocurrency world, there are a lot of projects with amazing tokenomics. However, it can be challenging to determine which projects are worth investing in.  This guide will help you spot a project with great tokenomics. In this way, you can make a great decision about where to invest your money.  Before analyzing the technical components of tokenomics, there are other red flags you should be able to spot. Our guide will begin with this premise and then move…

A Guide to the Signs that a Crypto Project is About to Fail

Cryptocurrencies are digital assets and a payment system invented by Satoshi Nakamoto. They use cryptography to secure their transactions and control new units' creation. Cryptocurrencies are decentralized, not subject to government or financial institution control. Bitcoin, the first cryptocurrency, appeared in 2009. With the rise in popularity of cryptocurrencies, there has also been an increase in crypto projects that end up failing.  This guide will explore the signs that a crypto project will fail. By understanding these signs, you can…

An Easy Guide to Initial Gaming Offerings (IGO)

Initial Gaming Offerings, or IGOs, have been gaining in popularity as of late. This guide will explore the ins and outs of IGO investing. The aim of this post is to help you make informed decisions about this investment opportunity.  We'll cover everything from what they are and how they work to the benefits and risks associated with them. At the end of the guide, you will find it easier to assess IGOs on the market. What Are IGOs, and…

Initial Metaverse Offerings (IMO) – A Beginner’s Guide

Initial Metaverse Offerings (IMO) allow businesses to raise money by issuing tokens on the blockchain. IMO offer investors a chance to get in on the ground floor of exciting new projects. Through an IMO, you may provide businesses with the capital they need to get started.  This guide will explore what IMO are, how they work, and what you need to know before investing in one. What Are Initial Metaverse Offerings (IMO)? Initial Metaverse Offerings are a way for blockchain…

Top 5 Crypto Portfolio Trackers To Use in 2022

An active cryptocurrency trader cannot do without the support of a crypto portfolio tracker. Not if they want to be successful at trading or investing. A crypto portfolio tracker is an app enabling you to monitor the amount and value of your crypto assets across all wallets, exchanges, platforms, and blockchain networks in real-time. It allows you to track historic transactions, live crypto prices, gains, and losses. Above all, it prevents you from mismanaging your portfolio while getting the best…

Five Gold-Backed Crypto to Consider in the Current Inflationary Economy

Many traders are optimistic about the blockchain's development potential and recognize that volatility is inevitable with new technology. Some are asking how to invest in digital assets while maintaining some degree of stability. A relevant part of investors frequently mentions stablecoins as a valid investment alternative. Anchoring the value of crypto to a fiat currency can undoubtedly sound appealing. However, fiat money depreciates as inflation increases, making stablecoins less valuable. In this particular context, the crypto market is offering a…