21Shares Launches Wrapped Bitcoin Token on Ethereum Blockchain
ETF issuer 21Shares’ parent company recently introduced its own version of a “wrapped” Bitcoin token on the Ethereum blockchain. The new product, known as 21BTC, aims to facilitate the next stage of decentralized finance (DeFi) and encourage broader adoption within the sector. If you are curious about wrapped tokens and how they operate, read on to get a better grasp of the concept.
Understanding Wrapped Tokens and Wrapped Bitcoin
A wrapped token enables the utilization of one cryptocurrency on a different blockchain. A prime example of this is Wrapped Bitcoin (WBTC), which ranks as the 14th largest cryptocurrency with a market cap of $8.8 billion. Acting as a representation of Bitcoin, WBTC functions on Ethereum, the second-largest crypto network known for its prominence in DeFi and NFTs.
- WBTC enables traders to leverage their Bitcoin holdings within the Ethereum ecosystem using tokens directly backed by Bitcoin.
- This seamless integration allows Bitcoin holders to access various DeFi tools without the need to acquire additional Ethereum or Ethereum-based tokens.
Significance of Wrapped Bitcoin in the DeFi Space
Wrapped Bitcoin plays a crucial role in DeFi, empowering users to borrow, lend, or trade digital assets without the involvement of third-party intermediaries. Over the past 24 hours, more than $127 million worth of WBTC tokens exchanged hands, according to CoinGecko.
- Several entities have recognized the potential of such offerings and have begun launching their institutionally-backed token variants, including the recent announcement by 21.co.
- 21BTC presents users with the opportunity to leverage Bitcoin’s liquidity within the Ethereum DeFi ecosystem, facilitating various DeFi applications from lending platforms to decentralized exchanges.
Controversies Surrounding Wrapped Bitcoin
Despite its popularity, the wrapped Bitcoin trend has not been immune to controversies. BitGo, the custodian of WBTC, announced a partnership with BiT Global to diversify custody operations across multiple jurisdictions, a move that garnered criticism due to BiT Global’s association with crypto entrepreneur Justin Sun.
- The involvement of Sun sparked concerns within the community, prompting clarifications from the parties involved regarding the strategic nature of their collaboration.
The Growing Demand for Tokenized Assets
Coinbase, one of the leading cryptocurrency exchanges in the US, recently revealed its plans to introduce a tokenized version of Bitcoin, known as cbBTC, on its network. Despite the ongoing controversies, the surge in demand for tokenized assets on different blockchains remains evident.
Hot Take: Embracing Innovation in DeFi
As the crypto landscape continues to evolve, the introduction of wrapped tokens like 21BTC signals a shift towards greater interoperability and accessibility within the DeFi space. Stay informed, stay engaged, and explore the possibilities that these innovative solutions bring to the realm of decentralized finance.
By
By
By