Ethereum is making bitcoin more and more scarce as it continues to eat up the largest digital currency.
Today, the second-largest digital asset is leading the market, surging to a new 2-year high. Also, Ethereum miners are raking in 3x more transaction fees than bitcoin as the cost to transact on the network skyrockets to a new all-time high.
Now, over $674 million worth of Bitcoin, 59,378 BTC, has been moved to Ethereum this year, thanks to the DeFi mania. In the DeFi sector, yield-bearing opportunities have people putting in lots of money, which will continue to increase as such options continue to rise.
Stablecoins have already migrated to Ethereum en masse; now bitcoin is drawn by the allure of Ethereum’s booming DeFi ecosystem.
“With only 0.3% of all bitcoin on Ethereum and DeFi booming, the opportunity for decentralized bridges between the two chains is hard to ignore,” noted Messari.
A good chunk of this BTC contribution comes from wBTC, which has BitGo, the undisputed leader in bridging bitcoin to Ethereum. In this wrapped Bitcoin token’s case, users simply send their BTC to BitGo, which custody's it on their behalf and, in turn, mints BTC pegged ETC-20 tokens on Ethereum (wBTC).
These BTC-pegged tokens can be used in various DeFi protocols for different purposes, such as lending and liquidity provision. Currently, $444 million in wBTC has been minted on Ethereum, as per Btconethereum.com.
A total of 97% of wBTC is cloaked in smart contracts; 37% as collateral in Maker CDPs, 21% in providing lending liquidity in Aave, 15% are acting as liquidity on DEX Curve, and the remainder on other DeFi protocols including Compound, Balancer, and Set.
Unlike BitGo’s centralized solution, decentralized custodian networks RenVM and Keep Network have also emerged.
RenVM had over $162 million worth of BTC locked, and it has facilitated about $400 million in volume between chains. Meanwhile, Keep Network that was launched in May, had to pause the user deposits after a vulnerability was found in its codes a few days after the launch.
“This presents an interesting quandary for bitcoin. While it clearly has more utility after being converted onto the Ethereum blockchain, its underlying value ostensibly comes from the 68 TWh of power that go into securing the Bitcoin blockchain each year,” noted Glassnode.