Stretched thin? Wrapped Bitcoin assets may encourage supply crisis

Stretched skinny? Wrapped Bitcoin belongings could encourage provide disaster



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

Nonetheless, hodlers could also be cheering the renewed curiosity in BTCB for a distinct motive: every Bitcoin locked on BSC could contribute to a looming BTC provide disaster.

First introduced final 12 months, Binance initially noticed wrapped Bitcoin solely as a automobile for merchants to acquire cross-chain asset publicity with out leaving BSC. Since then, nevertheless, the utility of wrapped Bitcoin has boomed because of the precocious maturation of the DeFi ecosystem.

For example, 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 discovered vital 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 may very well 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 line with what Binance calls a “Proof of Belongings” web page, there are at the moment over 9,600 Bitcoin on BSC — over $181 million value. Nonetheless, the weblog submit 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, together with WBTC, and likewise, Interlay is utilizing help from a Web3 Basis grant to construct a trustless bridge bringing wrapped Bitcoin to Polkadot. Interlay will launch in early 2021.

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