What is WBTC whose market value has grown from 4 million to 1.5 billion US dollars in less than a year?

Since Satoshi Nakamoto released the white paper, Bitcoin’s decentralized financial approach has opened up many possibilities, whether as a digital currency or a payment system.

The virtual currency native community proposed the concept of decentralized finance (DeFi). Essentially, it allows users to provide financial services based on blockchain technology without resorting to traditional intermediaries. , you can perform operations such as transactions by yourself.

But since the concept was proposed, DeFi has gradually emerged in various service forms such as infrastructure, payment and lending, derivatives and insurance, and is regarded as a financial market with great potential.

As the foundation of DeFi, a new financial ecosystem, Ethereum has attracted more and more Bitcoins. The first Bitcoin to use the Ethereum token standard (ERC20 standard) - WBTC (Wrapped BTC), has a total locked position value of nearly 1.5 billion US dollars. This is the transition of BTC from the Bitcoin network to the Ethereum ecosystem. Huge flow.

So, WBTC, as the ERC-20 version of Bitcoin, has suddenly become one of the important solutions for DeFi and occupies a leading advantage in the field of tokenized crypto assets. What is the reason behind it? secret? Today let us unveil the mystery of WBTC.

01. What is WBTC

The full name of WBTC is Wrapped Bitcoin, literally It means "wrapped Bitcoin" and is an ERC-20 token based on Ethereum and linked to Bitcoin.

was jointly launched by blockchain projects such as BitGo, Kyber Network and Ren, and was officially launched in January 2019. This token is issued on Ethereum and is anchored 1:1 with Bitcoin. It is an ERC-20 version of Bitcoin and the first ERC-20 version of BTC. It aims to make BTC liquid. sex into the Ethereum ecosystem.

In the past two years, leading transactions have begun to expand DeFi, making it once a "potential stock" ecosystem in the blockchain. Ethereum is the "main battlefield" of DeFi, and Bitcoin, as the most important digital asset, is also being introduced to the Ethereum chain through different solutions to participate in DeFi, and WBTC is one of the solutions.

On the one hand, the emergence of WBTC does not affect the storage value of Bitcoin, but can also participate in services on Ethereum. By migrating Bitcoin to Ethereum, investors can continue to use DeFi. Looking for money making opportunities.

On the other hand, WBTC provides a solution for the weak liquidity of decentralized trading platforms, and decentralized exchanges provide WBTC holders with income in return.

Crypto liquidity provides financial incentives that also attract Bitcoin holders.

Data shows that as the first Bitcoin to use the Ethereum token standard (ERC20 standard), WBTC has a market value of nearly US$1.5 billion. This is a huge flow of BTC from the Bitcoin network to the Ethereum ecosystem. . This showcases the strong growth of the decentralized finance (DeFi) market in 2020 and WBTC’s dominance relative to other tokenized crypto assets.

02. Why does Bitcoin want to join in the excitement of Ethereum’s DeFi as it is its own DeFi?

Bitcoin itself is a form of DeFi, and developers are constantly working on Bitcoin. Build new DeFi applications on the network. However,

Bitcoin itself cannot be easily moved across chains on Ethereum, and most applications are still in the theoretical stage. Compared with Ethereum, DeFi has some flaws in terms of security and stability.

So there is a tokenized version of Bitcoin on Ethereum. DeFi built on Ethereum does not require cumbersome cross-chain operations. The safety and convenience of asset swaps in a single chain also make up for the shortcomings of slow transaction speed. This is also an important basic equipment for the development of DeFi.

Since most DeFi products and projects currently run on Ethereum, it has also brought popularity to Ethereum, and the number of Bitcoins on the Ethereum network has surged. On the other hand, if DeFi continues to maintain this growth momentum, it can lay a more solid foundation for the Ethereum network as the prototype of the financial landscape.

If you want to combine the best of Bitcoin, Ethereum, and DeFi, then WBTC is one of the new breakthroughs. Currently, WBTC has been integrated into many DeFi platforms, such as Kyber Network, Airswap, etc. In addition, some other versions of tokenized Bitcoin are also emerging, such as renBTC, sBTC, etc.

03. Summary

In fact, when WBTC first appeared in 2019, it did not show obvious advantages, but MakerDAO accepted WBTC as a DAI loan. Collateral became a breakthrough for Bitcoin on Ethereum, and then it skyrocketed.

But the permissionless nature of DeFi makes using Bitcoin on Ethereum potentially risky.

What other advantages do you think about Bitcoin-anchored coins? Welcome to share your views in the message area.

The above is the detailed content of What is WBTC whose market value has grown from 4 million to 1.5 billion US dollars in less than a year?. For more information, please follow other related articles on the PHP Chinese website!