Ethereum blockchain now holds over 20,000 tokenized bitcoins

With ERC-20 tokens like WBTC, Bitcoin could now compete in the red-hot DeFi development space

At the end of June, Dune Analytics reported that over $60 million worth of Bitcoin had migrated to Ethereum via various ERC-20 protocols. At the end of July, it recorded an all-time record of $225 million in tokenized bitcoins.

One of the largest ERC-20 contributors to this growth is Wrapped Bitcoin (WBTC) with a 76% percent market share and 15,500 tokenized Bitcoin.

What is wrapped Bitcoin?

WBTC is essentially an ERC-20 token running on the Ethereum blockchain – with its value backed by actual bitcoins.

The protocol was introduced in 2019 with the intention of bridging the gap between the older Bitcoin protocol with more contemporary platforms — such as Ethereum — while still retaining Bitcoin’s massive capital pool for liquidity.

Since WBTC is an ERC-20 token, investors could use Bitcoin via WBTC on the Ethereum network to enjoy many of its features, including decentralised applications (dApp), smart contracts and DeFi (decentralised finance) services.

When investors want to convert their Bitcoin into WBTC, a merchant will facilitate this transaction;  ownership is validated and the bitcoins are stored away, while new WBTC is minted. When investors require a withdrawal, WBTC will be burnt and bitcoin will be taken out of storage to return it.

Under the management of Decentralised Autonomous Organisation (DAO), WBTC is regularly audited and verified on both Bitcoin and Ethereum platforms.

Currently, various tokenized protocols exist, such as WBTC, imBTC and renBTC.

Fueling the DeFi race

As of the end of July, the total value of DeFi peaked at $4 billion, leading experts to speculate that this might be the result of the amount of stored Bitcoin quadrupling on the Ethereum blockchain.

More and more Bitcoin users are borrowing, lending and investing more in DeFi, leading to an increase in Ethereum’s value.

Andy Bromberg, the President of CoinList, told CoinDesk that DeFi is, “the biggest opportunity for decentralized finance’s growth today.”

Developers have built DeFi applications with WBTC acting as its engine in record time. TokenSet was introduced almost a year after WBTC launched, which allowed users to trade ETH and WBTC autonomously and to profit from gains on both platforms.

The post Ethereum blockchain now holds over 20,000 tokenized bitcoins appeared first on Coin Journal.

scroll to top