Wrapped Bitcoin is a relatively new concept, but one that can prove vital to bringing liquidity to Defi.
How Do WBTC Tokens Work?
- Imagine you’re already familiar with Bitcoin and keen to start using Defi applications. But there is a problem.
- And there is not much of a cryptocurrency bridge connecting Bitcoin and Ethereum.
- And wrapped BTC helps to solve this problem and deliver some much-needed liquidity to Defi protocols.
- Also, WBTC is the ERC-20 token that’s backed on a 1:1 basis with Bitcoin. (In some ways, they can compare to stablecoins, even if Bitcoin itself isn’t always adamant.)
- When Bitcoin is wrapped, the cryptocurrency is held in reserve by the BitGo Trust. In an aim to be fully transparent.
- And (something that other stablecoins take struggle with,) the amount of WBTC in circulation remains made public — with proof that Bitcoin, the underlying asset, its existence securely held in custody.
- Also, WBTC can wrap (and unwrapped) in wallets such as those provided by CoinList.
What Are the Benefits of Wrapped Tokens?
- In short, they give the owners of digital assets the freedom to explore other blockchains.
- Also, a large chunk of the Defi ecosystem (and DApps) is based on the Ethereum network rather than the Bitcoin blockchain.
- Also, it can immensely frustrate BTC owners, as this means it’s nearly impossible for them and they get involved unless they sell their crypto assets and buy others.
- Later the WBTC network launched in January 2019 many Defi protocols — including MakerDAO, Dharma, and Compound.
- And the Kyber Network — take begun allowing borrowers to use WBTC as collateral.
- Also, it can then lock up into the smart contract, with crypto loans usually paid out using the DAI stable coin on the Ethereum ecosystem.
- And the Wrapp Bitcoin project is overseen by the WBTC DAO. To jog our memory, DAO stands for Decentralized Autonomous Organization.
Also Read: Reminders on Choosing an SEO Agency for your Business
Introduction Filmyhit is your ticket to the hottest new releases straight from India, and the best part is it won’t…
Introduction Are you tired of endlessly probing for a movie TV show to watch or scrolling through streaming enter Movierulz…
Review Wrapped Bitcoin (WBTC) Price, Charts, and News.