Stretched thin? Wrapped Bitcoin assets may encourage supply crisis


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In a weblog post of Friday, Binance re-introduced BTCB to the world — a wrapped Bitcoin asset supposed to convey liquidity from the world’s largest cryptocurrency, BTC, to Binance Sensible Chain’s DeFi (decentralized finance) ecosystem. 

Nevertheless, hodlers could also be cheering the renewed curiosity in BTCB for a unique cause: every Bitcoin locked on BSC could contribute to a looming BTC supply crisis.

First announced last year, Binance initially noticed wrapped Bitcoin solely as a automobile for merchants to acquire cross-chain asset publicity with out leaving BSC. Since then, nonetheless, the utility of wrapped Bitcoin has boomed because of the precocious maturation of the DeFi ecosystem.

As an illustration, WBTC — a wrapped Bitcoin token on Ethereum — has loved huge success since its January 2019 launch: it at the moment ranks because the #14 cryptocurrency by marketcap, and has found significant adoption in protocols corresponding to Aave and Uniswap, whose contracts each rank among the many top-10 holders of WBTC. 

Of their weblog, Binance famous that related adoption could also be attainable for BTCB. The wrapped Bitcoin might be used to mint stablecoins with BSC-native protocols corresponding to QIAN and Venus; as collateral for lending protocols corresponding to CREAM; and in yield farming and liquidity mining protocols corresponding to Beefy, Bakery, and Pancake. 

In response to what Binance calls a “Proof of Belongings” page, there are at the moment over 9,600 Bitcoin on BSC — over $181 million price. Nevertheless, the weblog publish specifies that solely 2,000 are circulating. 

Different good contract-enabled chains intend to compound the rising shortage. Solana’s cross-chain Wormhole challenge will flip ERC-20 tokens into SPL tokens, including WBTC, and likewise, Interlay is utilizing assist from a Web3 Basis grant to build a trustless bridge bringing wrapped Bitcoin to Polkadot. Interlay will launch in early 2021.

Notably if the success of wrapped and cross-chain Bitcoin belongings proceed to develop, establishments seeking to hoover the BTC provide could be confronted with mounting shortage. Aaron Wright, the co-founder of OpenLaw, pointed to such a attainable future in a Tweet: