WBTC Accounts for Over 78% of the Flow from DeFi Boom to Bitcoin Price
Bitcoin on Ethereum continues to surge at a record pace. There are currently nearly 150k BTC (worth almost $2 billion) on the Ethereum blockchain.
“DeFi turned Bitcoin into some of the world’s best collateral,” Bill Noble, chief technical analyst at crypto researcher Token Metrics, told Bloomberg. “Now, you have something else to do with your Bitcoin other than sell it.”
Wrapped Bitcoin (WBTC) is the biggest contributor to getting BTC tokenized on Ethereum blockchain and making it part of the decentralized finance (DeFi).
With 117,183 BTC, WBTC accounts for 78.4% of the total Bitcoin on Ethereum. In total, about 0.6% of all minted Bitcoin are wrapped through WBTC, where an investor deposits their digital asset with custodian BitGo.
“WBTC has meant there’s more flow-through from the DeFi boom to BTC’s price,” said Sam Bankman-Fried, chief executive officer of Alameda Research.
“It also means that BTC still has a place in a possible DeFi centric future.”
Alameda is one of the largest providers of WBTC to traders. It provided over 28,400 WBTCs in September, up from just 26 WBTC in July.
In terms of total value locked (TVL), WBTC is the third biggest DeFi project at $1.5 billion TVL after Maker and Uniswap.
Recently, Wrapped Bitcoin’s market capitalization reached its all-time high and became the sixth largest token on Ethereum after Crypto.com Coin (CRO), USD Coin (USDC), Chainlink (LINK), BNB (BNB), and Tether USD (USDT), which captures the top spot.
“Over the past several years, bitcoin synthetics have swollen to nearly 5% of floating (read: non-lost) BTC,” that involves Grayscale (450k+ BTC), WBTC, CoinShares (65k+ BTC), other BTC tokenized on Ethereum such as renBTC,tBTC, nad sBTC (25k+BTC), noted Ryan Selkis of Messari.
“ETPs + Wrapped Assets could be 25%+ of network assets in a few more years,” he added.
However, this could impact the security of the largest network eventually as miners who secure the network may make a switch to support Ethereum or another network to earn more than they would on Bitcoin due to low fees.