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Defect? Different types of wrapped bitcoin can make the supply crisis worse

November 21, 2020

In one publication Binance presented us again on Friday’s blog BTCB, A Bitcoin asset packaged with the intention of capturing some of the liquidity of the world’s largest cryptocurrency BTC in the DeFi (Decentral Finance) ecosystem of the Binance Smart Chain (BSC).

However, Hodlers may encourage renewed interest in BTCB for a different reason: Any Bitcoin blocked in the BSC can contribute to the impending BTC supply crisis.

First announced last year, Binance initially viewed BTCB as just a means for traders to get exposure to cross-chain assets without leaving the BSC. Since then, however The utility of these assets increased due to the early maturation of the DeFi ecosystem.

Defect? Different types of wrapped bitcoin can make the supply crisis worse
Defect? Different types of wrapped bitcoin can make the supply crisis worse

For example, WBTC, As a Bitcoin token in Ethereum, it has been very successful since its introduction in January 2019: It is currently the 14th cryptocurrency by market capitalization and has gained significant acceptance in protocols like Aave and Uniswap. their contracts are among the top 10 WBTC holders.

On its blog, Binance noted that a similar acquisition could be possible for BTCB. The wrapped bitcoin could be used to mint stable coins using native BSC protocols such as QIAN and Venus. as a guarantee for loan protocols like CREAM; and in high-yield farming and liquidity degradation protocols like Beefy, Bakery, and Pancake.

After what Binance calls On the “Proof of Assets” page, there are currently more than 9,600 Bitcoins in the BSC, valued at more than $ 181 million. However, the publication states that only 2,000 copies are in circulation.

Other smart contract chains aim to exacerbate the growing shortage. Wormhole, a cross-chain project by Solana will convert ERC-20 tokens to SPL tokens, including WBTC, and in the same way Interlay is leveraging support from a grant from the Web3 Foundation to build a trusted bridge that will bring the disguised Bitcoin assets to Polkadot. Interlay will start in early 2021.

Especially if the success of packaged bitcoin and cross-chain assets continues to grow, Institutions looking to hoard supply of BTC could face a growing shortage. Aaron Wright, OpenLaw co-founder pointed to such a possible future in a tweet: