By Tim Fries
In a recent announcement, BitGo product manager Kiarash Mosayeri revealed that they have converted one percent of Bitcoin’s circulating supply to Wrapped Bitcoin (wBTC). This one percent, which represents more than 187,200 Bitcoins currently worth around $6.2 billion, significantly improves liquidity in the decentralized finance (DeFi) ecosystem.
Wrapped bitcoin is an ERC-20 token that represents Bitcoin on the Ethereum blockchain, and enables Bitcoin owners to integrate into the world of Ethereum wallets, Dapps, and smart contracts. In particular, wrapped Bitcoins are valuable because they allow Bitcoin holders to interact with Ethereum’s enormous decentralized finance (DeFi) ecosystem.
Before wBTC, users who only held Bitcoin were unable to enjoy and use the DeFi dApps being built on the Ethereum protocol, which was greatly unfortunate. DeFi protocols were an opening to tap into the larger world of opportunities, filled with unimaginable yields and returns. Thus, wBTC was demanded, and greatly acknowledged.
WBTC can be a good source of passive income while used for staking and yield farming. In general, staking and yield farming are for ERC-20 tokens, which deprives Bitcoin of this monumental opportunity. Though, with wBTC, which is technically an ERC-20 token, staking and yield farming options become available.
Ethereum has the largest ecosystem where everyone is freely allowed to build numerous Dapps, smart contracts, and even their own cryptocurrencies. However, this diversity and distribution of funds can, at times, cause DEXs and other platforms to shortfall the requisite liquidity.
In such a scenario, wrapped Bitcoin can help as it holds both the value of a Bitcoin and the integrability of an ERC-20 token. Thus, by integrating the liquidity of BTC into the flexibility of Ethereum’s ecosystem, wBTC closes the liquidity loop between DeFi protocols.
Another impressive benefit of wBTC is that it eliminates the need for “chain-maximalist” perspectives — a tendency to favor one blockchain at the expense of others. In simple terms, the wBTC innovation contrives a way for Bitcoin holders to gain exposure to the Ethereum DeFi ecosystem and even earn interest on holdings, all without the need for swapping or diminishing their overall BTC holdings.
Currently, one percent of Bitcoin’s circulating supply has been converted to Wrapped bitcoin (wBTC). Numerically, it can be established that more than 187,200 Bitcoins — worth around $6.2 billion in current prices — are in the form of wBTC, and are contributing to DeFi’s liquidity.
According to data from The Block, the number of tokenized Bitcoins is increasing at an incredible pace. In the last 5 months alone, more than 100,000 Bitcoins have been tokenized.data:image/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==
In total, considering all tokenized versions of Bitcoin, more than 240,000 Bitcoins have been wrapped onto Ethereum, so far. This number expresses 1.3% of Bitcoin’s current circulating supply and 1.1% of Bitcoin’s eventual total supply.
Wrapped Bitcoin (wBTC) is the most popular form of tokenized Bitcoin, accounting for 80% of all the tokens wrapped onto Ethereum. Other more commonly used tokenized versions of Bitcoin are HBTC, renBTC, imBTC, sBTC, and tBTC.