Wrapped, or what’s broadly referred to as tokenized Bitcoin, has grown in recognition over the previous few months, with greater than 100,000 of it valued at nearly $1 billion at the moment in circulation.
This unprecedented rise in tokenized Bitcoin curiosity has been spurred by the farming growth within the DeFi token. It led to a 1200% rise in collateral tokens inside the business this yr alone. With the unprecedented development, it’s proof that Bitcoin investors are placing their holding to make use of as they’re uninterested in the current lackluster worth of the crypto asset. All of them need to have a share of the extremely responsive DeFi market motion.
Excessive-yielding DeFi farming incentives
As is stands, many buyers are investing in high-yielding DeFi farming incentives utilizing their Bitcoin, with the quantity of tokenized Bitcoin surging to report ranges. Ten days in the past, the provision of BTC on the good contracts growth platform stood at 73,000. However the determine has grown to almost 100,000. Because of this, Bitcoin’s provide valuation on Ethereum has crossed $1 billion.
Based mostly on data from a free analytics provider Dune Analytics, the variety of tokenized Bitcoin on Ethereum is nearing 100,000, which is precisely 0.5% of the entire provide of Bitcoin.
Why the current surge in tokenized Bitcoin
Nearly all of DeFi relies on Ethereum, which suggests naturally BTC can’t work with it. Because of this, it must be tokenized or wrapped into the ERC-20 kind.
Bitcoin has the identical worth as a tokenized Bitcoin, however the latter can be utilized on totally different DeFi platform and dApps based mostly on the Ethereum platform. There’s an rising DeFi farming incentive that gives liquidity swimming pools by way of totally different tokenized BTC variations, permitting buyers to make the most of their holding with none have to put up their Bitcoin on the market.
DefPulse.com revealed that for the previous three months, the quantity of collateral on xBTC has grown exponentially by 1300%, taking it to an all-time excessive of $630 million. However RenVM, a custodian and interoperable community for renBTC and DeFi belongings revealed its collateral on BTC has grown by 2700% with an all-time excessive of $270 million.
Nevertheless, different much less standard tokenized variations of BTC nonetheless exist, which incorporates pBTC, imBTC, sBTC, and HBTC.
How customers are tokenizing their BTC
Customers are tokenizing their Bitcoin holdings on Ethereum utilizing two most important strategies. They’re utilizing the custodian and non-custodian strategy. Within the first strategy, the Bitcoin investor sends all or a few of their Bitcoin belongings to a centralized custodian whereas receiving the identical worth of tokenized Bitcoin in alternate.
Nevertheless, the non-custodial strategy follows a decentralized escrow technique via a sensible contract.