The decentralized finance [DeFi] sector is in a boomtown as it has continued to attract a lot of attention. Riding the success of this space was the popular Bitcoin tokenization protocol Wrapped BTC [wBTC], which increased by a whopping 900 % in just two months as it crossed the $1 billion mark with respect to the total value [TVL] locked in.
This was noted by the blockchain intelligence platform, Glassnode which tweeted,
According to the popular DeFi tracking website, DeFi Pulse, Wrapped Bitcoin [wBTC] is now the fifth-largest DeFi protocol in terms of TVL, accounting for roughly 10% of the entire segment’s locked capital. Additionally, nearly 94.197K Bitcoin is locked in wBTC.
The growth of the tokenized protocol has been nothing less than extraordinary. Its TVL was only $4.30 million on the 1st of January this year and gained massive traction starting in mid-May which can be attributed entirely to
Maker development. This was due to the vote in early May by Maker to begin accepting wBTC as collateral on the platform.
A further push was noted in mid-June when the market share of Compound began rising steadily. This was due to the release of COMP and the frenzy of yield farming on Compound, the amount of wBTC went from a
fairly negligible amount to a massive surge above $100 million for the first time in less than a month later. Since then, despite a very few halts on the way, TVL saw a rapid growth in figures.
Rise in Popularity
Wrapped Bitcoins are essentially ERC 20 token based on the Ethereum network and are backed 1:1 by Bitcoin thus bringing in the value of the world’s largest cryptocurrency and its liquidity on the largest altcoin chain. This mechanism has become increasingly popular primarily because of two factors: flexibility and interoperability between different platforms.
In May this year, the amount of BTC on Ethereum even surpassed the amount of BTC on the Bitcoin’s popular layer 2 scaling network called the Lightning Network. Ethereum’s DeFi ecosystem has had such a strong gravity over a couple of months that even BTC holders are now finding ways to use it.