Wrapped Bitcoin Represents Over 1% of Bitcoin’s Circulating Supply

| Jon Nielsen

Key highlights:

  • Wrapped Bitcoin are Ethereum-based ERC20 tokens that represents BTC
  • The current amount of WBTC represents over 1% of the BTC circulating supply
  • Its owners also use it as a collateral to secure loans and for other advantages

WBTC now represents more than 1% of BTC supply

Bitcoin’s price drop in the last weeks has caused more and more crypto traders to try to make some additional profit lately, doing so by using synthetic forms of BTC, which opens their owners the door to enter the Ethereum blockchain.

Wrapped Bitcoin (WBTC) is a BTC converted to a ERC-20 token. That gives BTC holders a chance to use the advantages of the Ethereum network, such as wallets and smart contracts, but the main benefit are decentralized finance applications. 

Users can convert 1 Bitcoin to 1 Wrapped Bitcoin and the other way around through WBTC partners (CoinList, AAVE, Airswap, Maker, 0x) – the price of both is approximately the same, as they can be converted between each other on a 1:1 basis. 

At the moment, the amount of wrapped Bitcoin on the Ethereum blockchain is 191,825 BTC, making it significantly higher than it was one year ago. This number represents more than 1% of Bitcoin’s circulating supply, which currently stands at 18,74 million BTC. 

Denis Vinokourov, head of research at Synergia Capital, commented on the situation in a statement to CoinDesk: 

“Lackluster performance by bitcoin and growing interest in Ethereum-based exchange-traded products did little to derail the long-lasting trend of locking bitcoin on the Ethereum network. It shows the hunt-for-yield trade is nowhere near the exhaustion mark and also underlines the growing comfort, as well as a sense of security, that wrapping bitcoin is a safe method in earning yield on assets, be that by retail or more professional market participants.”

Crypto loans are now being secured by using WBTC tokens as collateral. Their owners also found advantage in lending them to DeFi platforms in exchange for market determined interest rates. 

There are some other versions of tokenized bitcoin – HBTC, renBTC, imBTC, sBTC, tBTC – but WBTC holds the lead by far in terms of market capitalization. As explained by Arcane Research: 

“In total, 240,000 BTC has now been tokenized into Ethereum protocols. WBTC remains the most popular option for tokenized BTC and accounts for 80% of all the BTC at work in Ethereum.”

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