Almost 1% of All Bitcoin is Held in Ethereum – Here is How DeFi is Eating Up Bitcoin

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Since the DeFi frenzy kicked off in 2020, something remarkable has been happening – Bitcoin is now one of the largest assets locked in DeFi.

wBTC is at the heart of this creative approach to bringing bitcoin onto the Ethereum ecosystem.

 

SEE ALSOBitcoin Above $13, 000 – The Longest Streak in 6 Months

 

We compiled a list of data that shows just how expansive the DeFi space has become and how it is now eating up bitcoin to remain alive.

Here are some stats about the current state of bitcoin in DeFi:

  • July 2020 – 0.1% of circulating bitcoin on Ethereum
  • August 2020 – 0.2% of all bitcoin on Ethereum
  • 2x growth of bitcoin locked in Ethereum (18.5K to 37K bitcoin) in 23 days in August
  • September 2020 – 0.4% of bitcoin on Ethereum
  • 2x growth of bitcoin locked in Ethereum (37K to 74K) in 23 days in September
  • October 2020 – 0.8% of all bitcoin is based on Ethereum
  • 2x growth of bitcoin locked in Ethereum (74K to over 164K bitcoin) in 50 days
  • Wrapped bitcoin (wBTC) market cap is now over $1.58 billion
  • wBTC makes up 80% of the total bitcoin held on Ethereum
  • wBTC is now Ethereum’s 6th largest token
  • Nearly 5% of all floating bitcoin in circulation is now made up of synthetic assets
  • Only 8.1% of bitcoin is held on exchanges (ViewBase)
  • 14% of bitcoin is held on exchanges (GlassNode)

Below is a breakdown of locked assets on Ethereum by marketcap from the largest to the smallest:

  • Tether USD (USDT)
  • Binance Coin (BNB)
  • Chainlink (LINK)
  • USD Coin (USDC)
  • Crypto.com Coin (CRO)
  • Wrapped Bitcoin (wBTC)

Below is a breakdown of all bitcoin synthetics representing locked bitcoin across the board:

  • Grayscale (GBTC) – 450K+ bitcoins
  • wBTC – 164K+ bitcoins
  • CoinShares – 64K+ bitcoins
  • renBTC / tBTC / sBTC – 25K+ bitcoins

Wrapped Bitcoin (wBTC) is the first ERC20 token backed 1:1 with Bitcoin. There is no doubt that it is bringing greater liquidity to the Ethereum ecosystem including decentralized exchanges (DEXs) and financial applications.

With most trading volumes taking place on centralized exchanges with bitcoin, wBTC changes that by bringing bitcoin’s liqudity to DEXs and making it possible to use bitcoin for token trades.

In other words, wBTC standardizes bitcoin to the ERC-20 format, creating smart contracts for bitcoin. This makes it easier to write smart contacts that integrate bitcoin transfers. As a result, exchanges, wallets, and payment apps only need to handle an Ethereum node.

However, the story does not end there.

According to BitGo, one of the partner companies that initiated wBTC, going by current numbers, as much as 10% of the total bitcoin supply could be wrapped and issued on Ethereum over the next two years.

Will this new use case for bitcoin last? Only time will tell.

 

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