The market of Decentralized-Finance (De-Fi) has severely outpaced Bitcoin (BTC) this year performance-wise. Users primarily focused on profiting from De-Fi tokens on Uniswap, leaving little room for growth for the leading cryptocurrency. However, the situation may soon drastically change as Bitcoin is set to become the leading network in the market.
For the past couple of months, we have seen an onslaught of Bitcoins that were converted and used on the Ethereum (ETH) network. This is made possible by wrapping coins and turning them into what is essentially an ERC-20 Bitcoin token. Since investors who primarily own digital gold wanted to participate in De-Fi as well, they decided to convert their digital assets.
As a result, we now have Bitcoin as the 6th-largest token on the Ethereum network. Moreover, it is the third-largest cryptocurrency in De-Fi based on the amount of total locked assets. According to market data aggregator De-Fi Pulse, WBTC is the third-leading protocol with $1.62 billion in collateral. This makes it more valuable than some of the best De-Fi projects in the space – such as Compound, Aave, Synthetic, and Yearn Finance.
WBTC is not the only wrapped Bitcoin network protocol in De-Fi, but it is surely the fastest rising one. The amount of collateral grew exponentially this year, going from only $200 million in August to $1.6 billion in October.
RenVM is another Bitcoin-wrapping protocol that is popular but it has never experienced such a drastic rise as we have recently seen. During the same period, total locked collateral on RenVM grew from $50 million to only $330 million.
Nevertheless, the migration of Bitcoin assets to Ethereum is unimaginable. Protocols such as Uniswap may leverage the growth to rise even higher as well, by offering Bitcoin-oriented features.
What Is the Use of Wbtc and Renbtc on Uniswap?
Previously, we learned the mind-boggling pace at which coins migrate from the Bitcoin network to Ethereum. But why would holders do such a thing?
Is there any incentive to wrap Bitcoin and use it on DEXes such as Uniswap? Of course, there are!
Thousands of whales and maximalists may have only owned Bitcoin so far. Their almost ideological beliefs that Bitcoin is the only digital asset worth talking about or owning blinded them back from participating in the exploding De-Fi space. However, wrapping Bitcoin through platforms like WBTC allows them to trade on protocols such as Uniswap, without ever selling their coins.
That way, they can freely exchange WBTC or RenBTC for another De-Fi token. Likewise, they can instantly trade back into their original Bitcoin without interacting with CEXes. All of this can be done without investing in Ethereum, at all.
With these factors in mind, we can see why every holder is excited to wrap their coins. Ideology aside, there is still a lot of financial growth to be achieved in the De-Fi sector and maximalists would be absurd not to participate.
Aside from the data that proves their already existing and increasing interest, we also know for a fact that whales are eager to trade on DEXes over CEXes.