ETF issuer 21Shares’ guardian firm on Tuesday introduced the launch of its personal “wrapped” Bitcoin token on the Ethereum blockchain.
21.co mentioned that its newest product—dubbed 21BTC—aimed to “usher within the subsequent part of decentralized finance (DeFi) and to assist allow DeFi’s broader adoption.”
You’ll have heard of “wrapped Bitcoin” and wrapped tokens—how do they work?
A wrapped token permits one cryptocurrency for use on one other blockchain. The largest instance is Wrapped Bitcoin (WBTC), the 14th largest cryptocurrency, with a market cap of $8.8 billion. Meant to symbolize Bitcoin, it runs on Ethereum, the second greatest crypto community and the hotspot for DeFi and NFTs.
WBTC permits merchants who wish to use their Bitcoin holdings within the Ethereum ecosystem to take action with tokens which might be one-to-one backed by Bitcoin. It’s how Bitcoin holders can work together with DeFi instruments with out spending more cash on Ethereum or different Ethereum-based tokens.
The token is a crucial software on the earth of DeFi—crypto merchandise that enable their customers to borrow, lend, or commerce digital property with out third-party intermediaries. Up to now 24 hours, over $127 million in WBTC tokens traded fingers, in response to CoinGecko.
Different entities have cottoned on and are releasing their very own institutionally backed variations of tokens—together with 21.co’s announcement at the moment.
“21BTC presents the flexibility for customers to utilize Bitcoin’s liquidity, however on the Ethereum DeFi ecosystem,” 21.co informed Decrypt. “That is of important significance for varied DeFi purposes from lending platforms to decentralized exchanges.”
However the wrapped Bitcoin craze isn’t with out controversy: BitGo, WBTC’s custodian, introduced final month it was teaming with Hong Kong-based BiT International to “diversify custody operations and chilly storage throughout a number of jurisdictions” for the token.
The transfer attracted some criticism due to BiT International’s ties to crypto entrepreneur Justin Solar. Bitcoin DeFi protocol Threshold—which mints a Bitcoin-wrapped token, tBTC—even proposed a merger with WBTC to “save” it.
Solar spoke out concerning the controversy final month and mentioned his involvement was “solely strategic.”
And America’s greatest crypto alternate, Coinbase, final month mentioned it might launch a tokenized model of Bitcoin, cbBTC, on its Base community.
Whatever the controversy, one factor is definite: there may be demand for the largest digital asset by market cap on different blockchains, and well-established companies like 21.co are keen to hitch the fray.
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