More than 0.2% of all Bitcoin is now represented on Ethereum: here’s why
Decentralized finance (DeFi) has seen parabolic growth in recent months, evidenced by tokens pertaining to the space rallying thousands of percent, massive projects being minted out of thin air, and the sheer number and variety of individuals talking about the subject.
The issue is: thus far, DeFi has involved Ethereum — and almost Ethereum only. This has meant that Bitcoin — largely regarded as the “reserve asset” of the cryptocurrency market — has been left out of the DeFi equation.
This is rapidly changing, though, with new data indicating that BTC is rapidly becoming an important currency to decentralized finance applications based on Ethereum.
0.2% of all BTC is now represented on the Ethereum blockchain
While you cannot transact Bitcoin to Ethereum wallets, developers have come up with a solution: to create contracts where one can deposit BTC and receive a token representing those coins on Ethereum.
There are multiple projects working on this: Wrapped Bitcoin, Ren, tBTC, among others.
Although there remain many skeptical of the security these contracts provide and the value of having Bitcoin represented on Ethereum, there are some willing to throw thousands of BTC at these projects.
According to Ethereum Foundation researcher Justin Drake, 0.2 percent of all BTC in circulation is now represented on Ethereum through the aforementioned projects.
0.2% of all BTC now on Ethereum.
2x growth (18,500 BTC to 37,000 BTC) in 23 days. https://t.co/IchB0HG0Df
— Justin Ðrake (@drakefjustin) August 16, 2020
The influx of Bitcoin being represented is seemingly a byproduct of the launch of a number of DeFi protocols, coins, and systems.
The most notable of these is CRV — the native governance token of the Curve protocol, a leading decentralized exchange focused on stablecoins and Ethereum-based Bitcoin tokens.
CRV launched just a few days ago. Although the project has been mired in some controversy due to a tacit “premine,” where individuals with knowledge of smart contracts managed to garner tens of thousands of CRV before the community, Curve has seen an influx of capital as people seek to acquire CRV.
As Curve supports Bitcoin tokens such as Wrapped Bitcoin and Ren Bitcoin, the introduction of CRV incentives has spurred many investors to send their BTC to the aforementioned projects, obtain newly-minted Ethereum-based Bitcoin tokens, then deposit them into Curve.
According to LoanScan, a DeFi info site, those depositing WBTC or renBTC in Curve can make 7.22 percent per year. This is an annualized yield, meaning it is subject to change as market dynamics do.
The importance of connecting Bitcoin and Ethereum
Steven Becker, president of MakerDAO, sees value in connecting Bitcoin to Ethereum. In an April interview with Bloomberg, he commented that the joining of Bitcoin and Ethereum will allow the blockchain economy to swell:
“tBTC is brilliant because ultimately it links two major concepts together. [Bitcoin and Ethereum working together] is how all these networks are going to come together to create the on-chain economy.”
The post More than 0.2% of all Bitcoin is now represented on Ethereum: here’s why appeared first on CryptoSlate.
Source: More than 0.2% of all Bitcoin is now represented on Ethereum: here’s why