Various blockchain projects have been attempting to bring BTC onto various platforms for some time as Bitcoin represents over 60% of the total market cap for all cryptocurrencies.
This is particularly important for DeFi dapps, which are always looking for additional liquidity. A few of the projects worth mentioning include; WBTC (Wrapped Bitcoin), imBTC (TokenIon), tBTC (Keep Network), sBTC (Synthetix), renBTC (Ren), and pBTC (ptokens).
Wrapped Bitcoin (WBTC) went live on Ethereum at the beginning of 2019. It is an ERC-20 token backed 1:1 with real Bitcoin and is intended to capture the benefits that can result from the tokenization of the Bitcoin cryptocurrency.
On May 3, 2020, WBTC, was approved as a new collateral asset by MRK holders on MakerDAO. Prior to that, there were only three options: ETH, BAT, and USDC.
It is vital that we capture and analyze the data from the inception of such initiatives to see how WBTC is impacting Ethereum DeFi. This report allows readers to understand the biggest events in May and how dapps are evolving as a result.
Key Takeaways
- WBTC market capitalization grew by 192% in 2020, 24% solely within May; diluted market capitalization almost doubled in May
- The TOP WBTC holder is MakerDao with 49% of the total supply
- Recent events drastically increased trading volumes across the TOP DEX
Wrapped Bitcoin capitalization change
If looking solely at the market cap of WBTC the increase is obvious. We see a 192% increase compared to the beginning of 2020 and 24% within May of 2020.
However, this is not only the result of one change that happened recently. On the 13th of May another wave of $10 million worth of BTC (~996 BTC) entered into circulation, which nearly doubled the existing supply to over $20 million.
TOP Holders of WBTC right now
At the time of writing the TOP holder of Wrapped BTC is MakerDAO which holds 49% of the total quantity. When it comes to other DeFi dapps, Compound holds almost 6% and Aave 4%.
MakerDao
As previously mentioned, WBTC was introduced as the fourth collateral to MakerDao on the 3 of May 2020. From that day onward WBTC usage within MakerDao contracts according to Etherscan data was increasing steadily till the 20 of May 2020.
On the 20th of May 2020 a huge peak was observed as explained by MakerDao creator Rune Christensen who believes that we are at an inflection point in DeFi.
Effect on DEX – WBTC perspective
Recently there has been a massive increase in trading volumes on Uniswap. Total ETH/WBTC and WBTC/ETH trading volumes grew by 51% in the first 20 days of May.
As for DEX there are some notable changes regarding trading pairs. As previously reported Kyber trading pairs where ETH/WBTC and WBTC/ETH.
In May the pair lost its leadership position where the most traded pairs DAI/WBTC and WBTC/DAI already generated 700k USD higher trading volumes than ETH/WBTC and WBTC/ETH.
Conclusions
May was an important month for the adoption of WBTC in Ethereum DeFi dapps. Notably 4 million DAI tokens were minted using WBTC as collateral in one day. Although the increase of WBTC is observed in other dapps like Aave and Compound no major events have happened so far.
WBTC is potentially a major catalyst for the DeFi space. ETH being the biggest collateral asset is much smaller than BTC. As such, it is interesting to see its volume grow, which may introduce additional liquidity specifically on Ethereum DeFi and DEX dapps.
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