Tokenized versions of Bitcoin like WBTC are on the rise in the DeFi era. The metrics point to more active addresses, higher volumes, and investors.
The era of decentralized finance (DeFi) is setting a stage that increasingly involves Bitcoin and its tokenized versions on Ethereum. Three metrics analyze the case of the Wrapped Bitcoin (WBTC) token and its meteoric evolution in the smart contracts network.
Additional incentives are driving Bitcoin’s presence on Ethereum, and MakerDAO has decided to establish the token as collateral for DAI. Another factor that would be playing in favor of WBTC is the new yield farming trend.
WBTC operators could be multiplying as a result of the creation of new addresses and more active addresses. During the first week of June, there were 200 active addresses or less. However, after yield farming, the peak exceeded 800 active addresses and then dropped to around 400.
The analysis indicates that the number of daily active addresses increased 5 times in the 5 days after the launch of the yield farming partnership between Ren, Curve, and Synthetix. Integrations with other DeFi protocols have allowed WBTC to triple its average daily active addresses to 169 so far this year.
The second metric considered was the volume of large transactions, which soared after the activation of yield farming. In this regard, transactions in WBTC for more than USD 100,000 were almost non-existent in 2019 and the first quarter of 2020.
The situation changed in early May, when WBTC and MakerDAO joined, producing transactions amounting to USD 28 million. However, the biggest push happened due to yield farming, which brought WBTC trading to a peak of more than USD 300 million.
The third aspect to highlight is the arrival of institutional investors, who could be driving the large volume of WBTC transactions up to USD 300 million. The average balance that WBTC maintains would show evidence regarding this point.
The study reveals that the average balance of a WBTC holder has increased as a result of the potential to make a profit from DeFi integrations. After starting the year at USD 2,350, the average balance of a WBTC address showed a trend higher than USD 10,000 at the end of May.
The figure increased even more after the launch of yield farming. The amount rose to USD 30,800 on June 27th, to then drop to USD 22,000.
Tokens in Figures
In recent days, a total of 11,146 Bitcoin-pegged tokens (ERC-20) were on the Ethereum network. Of that amount, 8,165 units are WBTC, which represented at that time about 73% of the total tokens. Currently, that figure stands at 78%.
After WBTC, renBTC is in second place with 1,094 tokens and HBTC is in third place with 710 units. Other Bitcoin-pegged token projects on Ethereum are pBTC, tBTC, and imBTC.
Currently, the total of Bitcoin tokens on Ethereum represents 0.05% of the total circulating supply of BTC, but that number may increase. Progress would depend on whether there are vulnerabilities in the underlying protocols and whether incentives to multiply revenues motivate operators.
By Alexander Salazar
