In a Friday blog article, Binance reintroduced BTCB, a wrapped Bitcoin commodity intended to help the Bitcoin Shortage and add liquidity to the DeFi (decentralized finance) ecosystem of Binance Smart Chain from the world’s largest cryptocurrency, BTC.
The revived interest in BTCB could be cheered on by Bitcoin holders for another reason: each Bitcoin locked on BSC may lead to a looming supply shortage for BTC.
Binance initially saw wrapped Bitcoin as just a tool for traders to gain cross-chain asset exposure without leaving BSC. However, since then the utility of wrapped Bitcoin has boomed thanks to the DeFi ecosystem’s explosion.
For example, after its launch in January 2019, WBTC, a wrapped Bitcoin token on Ethereum, has experienced huge success: it is currently rated by marketcap as the #14 cryptocurrency, and has found substantial adoption in protocols such as Aave and Uniswap, whose contracts both rank among WBTC’s top 10 holders.
Binance noted in their blog that parallel adoption could be necessary for BTCB. The bundled Bitcoin could be used with BSC-native protocols such as QIAN and Venus to mint stablecoins; as collateral for loan protocols such as CREAM; and in protocols such as Beefy, Bakery, and Pancake for yield farming and liquidity mining.
There are currently over 9,600 Bitcoins on BSC, over $181 million worth, according to what Binance called a “Proof of Assets” page. The blog post specifies, though, that just 2,000 are circulating. Binance hopes that BTCB will follow WBTC’s lead in “wrapping” the Bitcoin network.
Following in Wrapped Bitcoin’s Lead
WBTC has established itself as the most common Bitcoin variant tokenized for usage on the Ethereum network. There is currently a record total of 116,885 WBTC, backed by an equivalent amount of BTCs owned by crypto custodians, according to the official website.
WBTC’s market value currently hovers around $1.58 billion according to Coingecko.
In the past week, WBTC climbed up the ranks to overtake Compound Dai (cDAI), OKB and Bitfinex. By market cap overall, WBTC is actually the 18th-largest cryptocurrency.
Behind Crypto.com Coin (CRO), USD Coin (USDC), Chainlink (LINK), BNB (BNB), and at number one, Tether USD (USDT), this renders WBTC the sixth-largest Ethereum token by market value.
An ERC-20 token supported by BTC deposits 1:1, WBTC accounts for 80 percent of the Ethereum network’s $2 billion worth of BTC. To place the rise in context, there were just 80,000 tokenized Bitcoins in mid-September, worth just under $1 billion.
The WBTC adds greater liquidity, including decentralized exchanges (DEXs) and financial frameworks, to the Ethereum ecosystem. The bulk of the amount of trade today takes place on centralized Bitcoin exchanges. WBTC modifies it, adding the value of Bitcoin to DEXs and enabling Bitcoin to be used for token trades.
WBTC standardizes Blockchain to the format of ERC20, producing Bitcoin smart contracts. This makes it possible to compose smart contracts that implement payments from Bitcoin.