MakerDAO was the most powerful player in DeFi space and last year’s Multi-Collateral Dai launched showed the purpose of the protocol. Currently, in order to continue the development of stablecoin DAI, according to Maker’s official blog, the company is conducting an executive poll to add WBTC as a collateral style asset to DAI.
Last year, Creator released its MCD back in November 2019, but the protocol backed only a bunch of new collateral assets in addition to Ethereum. In the beginning, the likes of BAT were added to the collateral bin. The USDC was recently introduced after the market collapse on 13 March, which was introduced in order to achieve some form of stability in the Maker system.
The addition of wBTC may seem shocking to a member of the group, but the wrapped asset has been on the sidelines, and many have suggested that it is one of the best ways to inject Bitcoin’s liquidity into the Ethereum network.
What is wBTC?
WBTC, or Wrapped Bitcoin, is an ERC20 token based on Ethereum that is 1:1 attached to Bitcoin. WBTC leverages a consortium model for Bitcoin’s custody, relying on a number of popular DeFi projects including Kyber Network, Ren Protocol, and BitGo to name a few to carry, mint, and burn the underlying assets.
The inclusion of wBTC now opens the door to the growing unity between Bitcoin and DeFi. It has been noted that over the last 6 months, more and more options have been put on the table to carry BTC to DeFi. One of the key reasons for this is the strong liquidity of Bitcoin.The Ethereum community believed that the financial functionality of DeFi and Ethereum would boost several folds if any bitcoin liquidity was present in the ETH blockchain.
wBTC all-time high in Total Locked Value
According to DeFi Pulse, the wBTC is incurring an all-time high valuation of the overall value of the US dollar at the press time. At more than 10 million locked in TVL, its utility has seen a dramatic rise over the past month, even though the May depreciation took its TVL down to $4.31 million on May 13.
It is also important to note that wBTC has been leading Lightning Network Capacity over the past month as BTC locked in Lightning stayed relatively below wBTC’s capacity.
The rise in TVL in wBTC terms can also have an effect on the price of Bitcoin. By locking bitcoin on the network through wBTC, the amount of bitcoin in circulation is reduced indefinitely. This causes the supply chain of Bitcoin to become smaller and the shortage in circulation that unintentionally increase the value of the King’s coin.