Interoperability between different blockchains and cryptocurrency ecosystems is virtually non-existent today. Thankfully, intermediate services exist to make this a possibility. Wrapped Bitcoin is proving to be incredibly popular lately, which may have something to do with the surge in popularity of DeFi.
What is Wrapped Bitcoin Again?
Although the term Wrapped Bitcoin, or WBTC, is often mentioned in the cryptocurrency space, it remains a foreign term to most. As the name suggests, a WBTC is designed to bring more functionality and flexibility to Bitcoin holders. It represents an ERC20 token on the Ethereum blockchain which is backed 1:1 with BTC.
As such, every WBTC has the full value of 1 Bitcoin. However, as BTC lacks any access to DeFi solutions or most dApps, this intermediate token can bridge the gap between Bitcoin and Ethereum. Additionally, it is an intriguing vehicle to improve the overall liquidity of Ethereum’s ecosystem. WBTC is also accessible through several DEXs and atomic swaps.
Using WBTC benefits both traders and service providers. Tapping into more liquidity is excellent, yet it also offers a way for users to get in on everything the Ethereum ecosystem has to offer. Whether it is exploring different trading pairs or even venturing into the growing DeFi ecosystem, everything is possible. As such, it would appear as if WBTC is of great interest, especially in recent days.
Growing Interest in WBTC
Thanks to the good people at Glassnode, it becomes easier to get an overview of how popular Wrapped Bitcoin really is. Since its inception, there has been slow and steady growth. It is, on the surface, a bit of a niche product, but one that has tremendous potential when used correctly. Since late May 2020, the demand for this ERC20 asset has grown significantly. A lot of new addresses have been created for this asset specifically.
Based on the current statistics, there is $51.6 million locked in WBTC tokens. This represents roughly 5.400 BTC, a net increase of 486 BTC in the past day or so. It appears that Bitcoin holders are looking to put their holdings to work. This may also explain why long-term Bitcoin holders have been stockpiling more BTC in the first half of 2020.
Wrapped Bitcoin is currently the 6th most popular DeFi offering on Ethereum in terms of overall value locked. Its total capacity also exceeds the Lightning Network by a big margin. Contributing liquidity to the Lightning Network will make Bitcoin faster and potentially cheaper to use. However, most holders want to make money, and they will explore WBTC to achieve that goal.