What is Wrapped BTC (WBTC)?
Wrapped Bitcoin (WBTC) is an innovative concept that emerged in January 2019, created to bridge the gap between the Bitcoin and Ethereum blockchains. It essentially represents Bitcoin in the Ethereum ecosystem, maintaining the value of Bitcoin with the flexibility of an ERC-20 token. This innovation was developed to integrate the liquidity of Bitcoin with the expansive decentralized finance (DeFi) ecosystem on Ethereum. WBTC tokens are backed 1:1 with Bitcoin, held in custody by regulated custodians, ensuring transparency and security.
The key purpose of WBTC is to allow Bitcoin holders to participate in Ethereum-based decentralized applications (dApps) and smart contracts while maintaining exposure to Bitcoin. This cross-chain approach enhances the utility and interoperability of both Bitcoin and Ethereum, playing a pivotal role in the evolving landscape of blockchain finance. WBTC is widely used in various DeFi platforms for lending, yield farming, and trading, providing a bridge between the world's leading cryptocurrency and the rapidly growing DeFi space.