There is now over $ 100 million in BTC floating around the Ethereum economy. While it’s only a fraction of BTC’s total market cap, there’s no denying that the trend is growing. Ultimately, Ethereum acts as a source of gravity for global financial assets. And bitcoin is the first victim.
The reason? Decentralized financing. With Compound, Maker, and others now offering permissionless financial services with Bitcoin as security, people are choosing to migrate their native Bitcoin to Ethereum to take advantage of the “verbs of money” available on the network. I mean, who wants to sit around and hold BTC these days anyway? Boring.
They do this by depositing BTC and exchanging Ethereum’s ERC20 tokens 1: 1 so that the coins are effectively tied to Bitcoin. These ethereal-based BTC are available in many variants, from central ones with WBTC to more permissionless ones with renBTC.
The biggest source of gravity for Bitcoin in recent weeks has been Compound. Following the start of COMP Yield Farming in mid-June, the credit log increased the BTC lock from ~ $ 90 million to over $ 570 million, a 533% increase in less than two weeks.
MakerDAO started it
Maker was the first driver of BTC’s surge on Ethereum after adding WBTC as collateral in May. However, WBTC hit its debt cap of 10 million circulating DAI, which resulted in the amount of new BTC in Maker being tied to flatline.
This shouldn’t take long, however, as MKR holders are likely to vote in the coming days to double the debt ceiling and more Bitcoin will be inhaled by Ethereum and its decentralized reserve bank.
Another driver behind the recent surge from BTC to Ethereum is Balancer, the liquidity and wealth management protocol that started income farming earlier this month. Balancer has added 1,660 BTC to its log as of June 1, or approximately $ 15M worth of it.
Astronomical rewards
The final actor behind Ethereum’s BTC gravity was Curve, the AMM protocol known for its highly efficient stable coin trading. The up-and-coming AMM recently launched a BTC pool that includes three main flavors of BTC including WBTC, RenBTC, and sBTC, the SNX-backed version of Synthetix’s BTC.
The interesting thing about the Curve BTC pool is the underlying incentives for high-yield farming. In case you missed it, Ren Protocol and Synthetix have teamed up to offer one of the most complex multi-asset income farming games the DeFi ecosystem has seen to date. Users who supply Curve with BTC liquidity not only receive trading fees, but also SNX, REN, BAL and CRV incentives. As a result, the BTC pool quickly amassed just under $ 16 million in BTC in just a few weeks of its inception.
The common theme here is crop farming. The incentive to earn native protocol tokens is just too tempting. People just can’t resist using their otherwise idle BTC to earn the astronomical rewards, which are usually between 30% and 100% APY.
The battle for BTC on Ethereum
WBTC is currently dominating the tokenized Bitcoin market as it accounts for ~ 78% of all BTC on Ethereum. But Ren Protocol’s introduction of RenVM brought a new fighter to the arena – renBTC.
After launching in early June, the trusted cross-chain manager of the Ren Protocol (RenVM) allocated nearly $ 10 million in new BTC to Ethereum in the past month alone. As a result, renBTC currently accounts for nearly 10% of all BTC circulating (and rising) on Ethereum. As mentioned earlier, one of the reasons for this growth was the introduction of BTC incentives for Curve’s multi-asset yield farming as well as the introduction of wbtc.cafe – a permissionless portal for packing BTC on Ethereum via a normal Bitcoin Transaction provided by Ren.
Along with Keep Network’s tBTC struggling to reach the mainnet, renBTC has overtaken the narrative for trusted BTC on Ethereum. The only thing missing for renBTC is a wide range of integrations across DeFi protocols that are largely dominated by WBTC. However, as Ren continues to flex its trusted muscles, more DeFi protocols are likely to support renBTC in the future.
WBTC & RenBTC displace others
Outside of WBTC and RenBTC, the other flavors are losing market share. The next two closest competitors are hBTC and imBTC, which account for 6.38% and 5.44% of all BTC on Ethereum, respectively.
While imBTC started out as a relatively popular alternative to WBTC, it has lost a significant portion of its market share since the start of the year – a decline from 40.8% to 5.44%. Additionally, hBTC has stagnated as Huobi’s version of wrapped bitcoin has been in circulation at 710 BTC since it was launched in late February.
It is becoming increasingly clear that as an asset, Bitcoin cannot combat the appeal of Ethereum. The potential for BTC in DeFi protocols is just too big. Now that productive agriculture offers insanely high passive income opportunities – despite being at high risk at times – BTC has no chance.
BTC on Ethereum is one thing and the trend is there. It is undeniable. The question now is: How much Bitcoin will land on Ethereum from the current 0.05%? 1%? 5%? More?
Could BTC on Ethereum flip the amount of BTC on Bitcoin? It seems crazy to even think about it.
But only time will tell.
If you’re interested in following the day-to-day life of BTC on Ethereum, check out these two fantastic resources:
https://btconethereum.com/
http://www.predictions.exchange/ethbtc/
– –By Lucas Campbell
[This story was written and edited by our friends at The Defiant, and also appeared in its daily email. The content platform focuses on decentralized finance and the open economy and is sharing stories we think will interest our readers. You can subscribe to it here.]
Comments are closed.