By
Temitope Olatunji
April 24th, 2024
A new Bitcoin-backed stablecoin called Wrapped Bitcoin (WBTC) has been launched on the Ethereum network and will offer cross-chain trading options.
In 2018, the entire community was discussing the benefits of stablecoins. Startups were actively launching their U.S. dollar-backed digital assets, deeply believing that the support of the fiat currency will help them to overcome the volatility of the market.
The concept of stablecoins presupposes being backed by some assets with stable value. The dollar is not the only possible asset, it’s just one of the most popular variants.
But now not the most stable asset has been chosen to back a new stablecoin. As it has been revealed, a new Bitcoin-backed coin has been launched on the Ethereum blockchain.
Why Bitcoin
This new stablecoin is called “Wrapped BTC” (WBTC). It has been officially launched on Ethereum which makes it possible for its users to conduct Bitcoin-based transactions on a different blockchain. WBTC is already available for trading on several platforms and applications.
The first information about the initiative was disclosed in October. It was announced as a joint project created by decentralized exchange startups Republic Protocol and Kyber Network, and cryptocurrency custody company BitGo.
According to the team staying behind the project, WBTC is intended for ensuring greater liquidity to the Ethereum ecosystem in general including financial apps and decentralized exchanges.
BitGo CTO Benedict Chan explained that WBTC would unite the best qualities of both Bitcoin and Ethereum. According to him, the new stablecoin has “the stability of Bitcoin and the flexibility of Ethereum” which makes it similar to traditional assets.
Though Bitcoin is volatile if compared to the U.S. dollar, it is still considered to be the most stable and liquid crypto asset that is the number one among the top cryptocurrencies due to its major market capitalization.
It is reported that 72.4214 WBTC are already on the Ethereum network, backed by 72.4216 BTC that are locked in custody on the Bitcoin blockchain.
What WBTC Expected to Bring
First of all, with WBTC the Ethereum network can enable new applications and use cases for Bitcoin. While WBTC standardizes Bitcoin to the ERC20 format, it opens new opportunities for it and its holders.
It ensures cross-chain functionality, and Bitcoin’s liquidity that will be brought to the Ethereum blockchain will help to support the development and wider integration of applications (DApps).
A number of DAppa will now get an opportunity to use Bitcoin for margin trading, decentralized lending, and derivative markets.
Secondly, with WBTC traders will have a possibility to use Bitcoin value working on decentralized exchanges (DEXs). The list of these DEXs includes AirSwap, IDEX, KyberSwap, Loopring, TheOcean and many others. Moreover, for wallet providers and exchanges it will become easier to support various currencies as it will be enough to maintain only the one Ethereum node.
According to the reports, WBTC is a community-led token which is focused on ensuring a transparent governance structure. Users will be provided with an option to track the live token supply via a dashboard on the WBTC platform and to monitor token information on other third-party websites.