Stretched thin? Wrapped Bitcoin assets may encourage supply crisis


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

Nonetheless, hodlers could also be cheering the renewed curiosity in BTCB for a unique motive: every Bitcoin locked on BSC might 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, nevertheless, the utility of wrapped Bitcoin has boomed because of the precocious maturation of the DeFi ecosystem.

As an 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 found significant adoption in protocols resembling Aave and Uniswap, whose contracts each rank among the many top-10 holders of WBTC. 

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

In keeping with what Binance calls a “Proof of Property” 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 undertaking 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.

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