Almost 1% of all Bitcoin in circulation is now used on Ethereum

Published on by Cryptoslate | Published on

One of the biggest focuses of this past year in DeFi has been the rapid rise of Wrapped Bitcoin, tBTC, and other projects that allow investors to deposit their BTC in exchange for an Ethereum-based token representing a claim on that Bitcoin.

Synthetic Bitcoin count on Ethereum continues its strong uptrend.

Ethereum 2.0 researcher at the Ethereum Foundation Justin Drake recently noted that per his data, 0.8 percent of all BTC is now based on Ethereum.

Due to the DeFi craze of the summer, there were protocols through which BTC holders could basically earn dozens of percent annualized on a hard, appreciating asset such as Bitcoin.

Those opportunities have begun to dry up as DeFi coins have continued to get crushed by a weak Ethereum and a rapidly surging Bitcoin.

"Wrapped bitcoin follows the yield opportunities. The yields we saw for BTC in Defi have already collapsed a lot, because they were fueled by the retail buyers of tokens like CRV, COMP, UNI, and the countless food tokens. And those buyers are running out."

Of note, some think that if PayPal moves forward with the acquisition with BitGo as is rumored, Wrapped Bitcoin could undergo some changes.

He explained to Bloomberg very recently that the increasing amount of commerce taking place in Bitcoin based on Ethereum will take away fees from accruing to the Bitcoin blockchain directly.

Messari founder Ryan Selkis noted that nearly five percent of all "Floating" Bitcoin in circulation is now made up of synthetic assets like WBTC, Grayscale's GBTC shares, CoinShares' fund shares, or other ways to represent a Bitcoin claim/value in another matter.

Over the past several years, bitcoin synthetics have swollen to nearly 5% of floating BTC. + Grayscale: 450k+ BTC+ WBTC: 100k+ BTC + Coinshares: 65k+ BTC+ renBTC/tBTC/sBTC: 25k+ BTC. ETPs + Wrapped Assets could be 25%+ of network assets in a few more years.