Alpen Labs Launches Bitcoin Dollar, A Bitcoin-Collateralized Stablecoin

A new stablecoin has joined the crypto party. Alpen Labs has unveiled the Bitcoin Dollar (BTD), a US dollar-pegged stablecoin fully backed by Bitcoin. It’s the latest attempt at a departure from conventional stablecoins that rely on fiat reserves, mixed crypto collateral, or governance tokens. The protocol is deployed on Alpen’s zero-knowledge (ZK) rollup layer-2 network, combining BTC over-collateralization with immutable smart contracts to advance censorship-resistant financial tools.

Alpen Labs positions BTD as a neutral public-good protocol that eliminates custodial and governance risks. The network allows users to mint and redeem tokens directly through on-chain mechanisms, without centralized control or upgradeable code, aligned with Bitcoin's decentralization principles.

How BTD differs from existing stablecoins

Unlike fiat-backed tokens such as USDC and USDT, which depend on off-chain USD reserves held by centralized custodians, BTD locks BTC as collateral using Liquity V2’s governance-free borrowing architecture. This design ensures 100% over-collateralization and peg stability without relying on any governance or utility tokens.

In contrast to algorithmic stablecoins – many of which suffered high-profile depegs (check here for the list of failed stablecoins: ChainSec.io) – BTD’s collateral model and immutable contracts aim to maintain consistent dollar parity.

Additionally, BTD’s zero-knowledge rollup security creates a high-trust bridge for Bitcoin transactions. While the protocol depends on third-party oracles for BTC/USD price feeds, Alpen Labs plans to aggregate multiple data sources to mitigate oracle risks and maintain robust pricing.

“Many very credible stablecoins already exist, and even more are coming. But none have met the bar for a truly Bitcoin-native financial primitive, one that’s scalable, censorship-resistant, private, and permissionless. That vision is finally coming into focus,” Seroy wrote in a blog post on Alpen’s website, summing up the core idea of the project.

Early Bitcoin-backed stablecoins

The first crypto-collaterized stablecoin was BitUSD. In July 2014, it emerged on the BitShares blockchain attempting to maintain a 1:1 peg via BitShares collateral, but ultimately suffered from unpegging issues during market downturns.

The same year saw the launch of NuBits, governed by the uncollateralized, algorithmically-backed Seigniorage system. However, volatility in its collateral and under-diversification led to peg failures in 2016 and 2018. These early experiments highlighted the risks of both algorithmic and crypto-backed models without strong over-collateralization and immutable code.

By December 2019, Money on Chain introduced Dollar on Chain (DOC) on the RSK sidechain, marketing it as the first fully BTC-collateralized stablecoin on a Bitcoin layer-2. DOC’s smart contracts guarantee a 1:1 USD peg backed solely by locked BTC, avoiding fiat dependencies and offering trust-minimized minting and redemption via RSK’s federated bridge. While DOC endured without major depegs, its reliance on a federated RSK bridge and absence of zero-knowledge proofs left room for further innovation, such as Alpen Labs’ BTD.