Demand for the Wrapped Bitcoin (wBTC) has been rising tremendously in the previous couple of weeks, with greater than 23,100 wBTC ($274 million) presently in circulation.

According to knowledge from FlipsideCrypto, a digital asset knowledge supplier, greater than half of those wBTC had been minted previously month because the decentralized finance sector noticed report progress.

Launched in 2019, wBTC is an ERC-20 token that’s pegged to the worth of Bitcoin (BTC). It permits customers to seemingly switch Bitcoin to the Ethereum community and work together with good contracts.

To get wBTC, customers should go to a certified service provider who will maintain the consumer’s BTC and alternate it for wBTC tokens. Merchants can mint and burn wBTC tokens as wanted.

The rising demand for wBTC reveals that Bitcoin customers are searching for high-yield choices to carry Bitcoin. According to a current report by Genesis, a digital foreign money prime dealer, institutional purchasers are additionally exhibiting related curiosity.

While there’s rising curiosity in wBTC, its progress can also be inflated by the yield farming phenomenon as greater than half of all wBTC in circulation is presently locked in DeFi lending protocol, Compound.

Yield farmers worth privateness

wBTC is by far the most well-liked Bitcoin-backed token used on the Ethereum community, however it is usually a centralized possibility that requires customers to undergo a know-your-customer process and to make use of a third-party custodian service. For some potential customers this raises privateness and censorship considerations.

While institutional curiosity round DeFi has been rising and even central banks are starting to get entangled, many customers are people who might need to keep nameless whereas utilizing wBTC.

As such, the demand for RenBTC, a decentralized and nameless various to Wrapped Bitcoin, has been surging as nicely.

RenBTC is much like wBTC however it options trustless storage for the Bitcoin being locked. This permits customers to totally personal their asset and stay nameless within the course of.

While not all DeFi protocols settle for renBTC, this token may also be exchanged for wBTC and used to entry DeFi protocols like Compound who solely settle for the latter.

According to Flipside Crypto, 19% of all new addresses utilizing wBTC in August purchased wBTC by means of renBTC. This reveals that privateness can certainly be a driving issue for extra progress within the DeFi sector.

DeFi’s potential appears limitless however can Ethereum help the expansion?

As DeFi continues to develop, new safety points are arising. Not solely have a number of DeFi protocols been topic to hacks and malfunctions, however the progress of yield farming itself may have penalties to the tokens concerned with every platform.

For instance, presently greater than 50% of all DAI is locked in Compound which might disrupt its peg with the greenback. In the case of wBTC, greater than half of its provide is locked in Compound as nicely. The continuance of this development may simply convey liquidity points for the tokens at hand.

Even extra regarding is the truth that the Ethereum community is turning into more and more slowed down by community congestion and excessive charges.

While it appears that evidently the longer term for DeFi and all its associated components is limitless, the nascent sector requires a powerful basis to face on.

At the second, the cornerstone is the Ethereum community however the query is can it maintain the rising variety of good contracts and calls for being positioned upon it?