The equivalent of $ 2 billion in Bitcoin has been tokenized for use on the Ethereum blockchain and the DeFi protocols it hosts. One way for bitcoin holders to grow their cryptocurrency while waiting for the price to rise.
Bitcoin's commitment to the Ethereum blockchain and decentralized finance protocols continues to unfold over the months. In mid-September, $ 1.05 billion in Bitcoin had been tokenized to access these services and generate passive income, on Curve Finance or Aave for example.
At the start of the month, that amount exceeded $ 1.5 billion, of which $ 1 billion was through the Wrapped BTC (WBTC) protocol alone. And the growth continues. Currently, there are 150,049 bitcoins on Ethereum, or about 4.32% of Ethereum's capitalization or $ 2.021 billion.
$ 1.5 billion in synthetic Bitcoin via Wrapped BTC
To have Ethereum-compatible tokens, users continue to favor Wrapped BTC. This tokenization service alone weighs nearly 80% of the Bitcoin available on the blockchain. This is the equivalent of $ 1.5 billion.
And the point of transforming bitcoin in this way is simple: access DeFi. Despite the ambition of competing blockchains, Ethereum remains essential in this ecosystem. According to DappRadar indicators, Ethereum indeed represents 96% of the total volume of transactions.
For long-term Bitcoin holders, DeFi is therefore a successful way to monetize their capital – pending a possible gain on the resale of bitcoin, a safe haven. Services like Uniswap also offer passive income in return for providing liquidity.
Bitcoin in search of returns, but at risk
Loan protocols are also an opportunity to earn returns through substantial interest. While the DeFi bubble is easing, it still continues to total around $ 11 billion in crypto through its smart contracts. However, the high volatility of certain DeFi protocols makes them a risky investment.
In fact, the main DeFi indices, including Binance's DeFi Composite Index, fell in October. As Cointelegraph points out, the decentralized finance bubble continues to deflate.
This trend was particularly tangible at the start of the month. Thus, according to Santiment's indicators, daily DeFi token trading volumes fell by 30% in total. The most popular protocols (Sushi, UNI and YFI) showed heavy losses, of 30 to 50% over a week. Santiment then spoke of "carnage".