What is Wrapped Bitcoin (WBTC)?
Wrapped Bitcoin is an ERC-20 token that represents Bitcoin on the Ethereum blockchain. Put simply, each WBTC turns out to be a 1:1 representation of Bitcoin. This means that the value is always equivalent to Bitcoin. That means Bitcoin holders can bake their BTC into funding DeFi, which includes DEXs, lending platforms, and many more.
What problem does Wrapped Bitcoin solve?
WBTC can solve many problems and bring Bitcoin liquidity and its value into the Ethereum network:
WBTC enables BTC to be leveraged and used across Ethereum's decentralized finance applications that are not natively compatible with BTC.
More use cases will be available to WBTC holders, giving them opportunities for yield and leverage on their assets within the Ethereum ecosystem.
This increases DeFi platform liquidity as users can hold Bitcoin without necessarily selling it to participate in such platforms.
More utilities shall be delivered to holders, allowing for a choice of yield generation and leveraging of assets within the Ethereum ecosystem.
Why the Crypto Market Needs Wrapped Bitcoin (WBTC)?
The crypto market derives several benefits from WBTC:
Enhanced DeFi Ecosystem: WBTC boosts the liquid and utility of DeFi platforms.
Increased Flexibility for Bitcoin Holders: Bitcoin holders can earn returns, access lending, and other DeFi services without selling off their BTC.
Bridging Blockchains: WBTC serves as a connector between Bitcoin and Ethereum, boosting interoperability throughout various blockchain settings.
History of WBTC
Wrapped Bitcoin (WBTC) was developed in January 2019, featuring BitGo, Kyber Network, and Ren. The protocol was designed to make sure that Bitcoin's liquidity would be used in the context of the Ethereum DeFi apps and also bring versatility to Bitcoin elsewhere.
Who Created WBTC?
Wrapped Bitcoin (WBTC) was created by collaborating with BitGo, Kyber Network, and Ren. BitGo is a company that provides digital-asset trust services, which help ensure the backing of 1:1 Bitcoin custody behind WBTC. Meanwhile, Kyber Network and Ren add interoperability to WBTC, making it flexible to interact with multiple DeFi applications and move seamlessly within the Ethereum ecosystem.
What Technology Does Wrapped Bitcoin (WBTC) Use and How Does it Work?
Given the above, at least a few technologies are used to make WBTC functional.
ERC-20 Standard: Being an ERC-20 token means any WBTC will be interoperable with the broad Ethereum application ecosystem.
Custodial Model: BitGo holds in custody an amount equivalent to the outstanding WBTC, assuring that each WBTC is fully backed.
Minting and Burning: Users deposit BTC with a merchant or custodian to receive WBTC; they redeem BTC by returning WBTC—when the latter is burned.
How Is Wrapped Bitcoin (WBTC) Price Related to the Price of Bitcoin?
The value of WBTC is directly pegged to that of Bitcoin. That is, one WBTC has to be fully backed by one unit of Bitcoin held in custody so that its value equals a BTCC's value. This peg is maintained through regular audits and the transparent minting and burning process, ensuring users can trust the parity between BTC and WBTC.
How Many Tokens of Wrapped Bitcoin (WBTC) Are There?
As of the latest data, there are over 153,024 WBTC tokens in circulation. The supply of WBTC fluctuates as users mint new tokens by depositing BTC or burn tokens by redeeming BTC.
What is the Maximum Supply of Wrapped Bitcoin (WBTC)?
There is no fixed maximum supply of WBTC. The supply is dynamic and depends on the amount of Bitcoin deposited and redeemed by users. As long as users continue to deposit BTC to mint WBTC, the supply can increase.
What is Wrapped Bitcoin (WBTC) Utility?
WBTC serves several key utilities within the crypto ecosystem:
DeFi Participation: Allows Bitcoin holders to participate in Ethereum-based DeFi applications, including lending, borrowing, and trading.
Liquidity Provision: Enhances liquidity on decentralized exchanges by bringing Bitcoin's value into the Ethereum network.
Collateral: Used as collateral in various DeFi protocols, enabling users to take out loans or earn interest on their BTC holdings.
Tokenomics of Wrapped Bitcoin (WBTC)
WBTC's tokenomics are straightforward due to its 1:1 backing by Bitcoin. Each WBTC token represents one Bitcoin, held in custody by BitGo. This ensures transparency and trust in the token's value. The tokenomics involve minting new tokens when BTC is deposited and burning tokens when BTC is redeemed, maintaining the peg and supply dynamics.
What is the All-Time High and All-Time Low for Wrapped Bitcoin (WBTC)?
All-Time High: $73,505.50 on March 14, 2024.
All-Time Low: $3,139.17.
Where to Buy Wrapped Bitcoin (WBTC)?
WBTC can be purchased on most major cryptocurrency exchanges, including:
Binance
Coinbase
Kraken
Uniswap
Huobi
These platforms offer various trading pairs for WBTC, including WBTC/BTC, WBTC/ETH, and WBTC/USD.
Who Invested in Wrapped Bitcoin (WBTC) at an Early Stage?
Early investment in WBTC came from its founding partners and initial users in the DeFi community. BitGo, Kyber Network, and Ren were instrumental in its development and initial promotion. The broader DeFi community quickly adopted WBTC for its utility and integration capabilities.
What Are the Revenue Streams of Wrapped Bitcoin (WBTC)?
Revenue streams associated with WBTC primarily come from:
Custodial Fees: BitGo charges fees for custody services, ensuring the secure holding of Bitcoin backing WBTC.
Transaction Fees: Fees are generated from the minting and burning processes as users convert between BTC and WBTC.
DeFi Integration: Platforms that integrate WBTC may generate fees from lending, borrowing, and trading activities involving the token.
By providing a bridge between Bitcoin and Ethereum, WBTC enhances the functionality and utility of both networks, making it a vital component of the DeFi ecosystem.
