A huge spike in the bitcoin locked in DeFi has been seen, as it jumps to 4,800k BTC. This has been the result of WBTC, an ERC-20 token backed with bitcoin, making BTC available on the Ethereum network.
Up until May, the Bitcoin locked in DeFi was just around 1,000 BTC. In May, so far, the locked BTC has jumped 243% to 3.85k BTC, as per DeFi Pulse.
This growth is also the result of Maker enabling WBTC as collateral. Earlier last week, it was confirmed that the newly minted WBTC was being sent to Maker. In return, 4 million DAI got minted with WBTC, a new way for the lending platform NEXO to leverage DeFi in their business.
Last week, Nexo locked up the remaining nearly 1000 WBTC worth about $9.2 million in Maker and then beat their last record by minting another 1.5k WBTC. The latest minted coins also made it to Maker which resulted in a massive spike on the WBTC in Maker and BTC in DeFi.
That newly minted WBTC did go to @MakerDAO as well.
In just 3 weeks, Maker Protocol has locked up 2,627 WBTC. https://t.co/CEyndb5e3S
— Mariano Conti | conti.eth (@nanexcool) May 22, 2020
The DAI minted against WBTC has also maxed out the debt ceiling for WBTC, currently sitting at about 95%, noted Alex Svanevik, co-founder of Nansen.
Dai outstanding is getting close to all-time high again🆙Currently 116 Million. Mostly as ERC20 as opposed to DSR which was most Dai at the previous peak.
— Dune Analytics (@DuneAnalytics) May 22, 2020
However, Ethereum co-founder Vitalik Buterin has shown his concern about this growth as he said, “I'm worried about the trust models of some of these tokens. It would be sad if there ends up being $5b of BTC on ethereum and the keys are held by a single institution.”
WBTC is primarily held by DeFi-related contracts with 68% of its total supply 3,861 WBTC now locked in Maker.