DeFi New Trend: WBTC pushes the value of Bitcoin on the Ethereum chain to a new high, which has exceeded the lightning network 5 times


Connecting Bitcoin to Ethereum has been the goal of many projects. In the past month, Maker added WBTC as Dai collateral. This move seems to directly ignite Defi’s new trend. In May alone, the number of Bitcoin tokens on the Ethereum blockchain (referring to the tokens that anchored the value of Bitcoin) has jumped from 2500 to 5000 directly. If these Bitcoins are calculated in U.S. dollars, the value of 5,000 assets linked to Bitcoin is about 47.7 million US dollars, and the value of BTC on the Ethereum chain is more than 5 times that of the Lightning Network.


This growth was mainly driven by WBTC, whose total locked value soared from US$11 million to US$35 million within 10 days, a threefold increase. WBTC is now undoubtedly the king of bitcoin tokens, and it accounts for 3/4 of the assets in all bitcoin tokens. 


Interestingly, HBTC and imBTC follow closely, and they all have one thing in common with WBTC, that is, they all rely on centralized hosting solutions. Synth Bitcoin (sBTC), which ranks fourth in market share, is supported by SNX tokens, and does not require Bitcoin as its value support. So if we remove sBTC from all bitcoin token shares, the centralized hosting solution currently accounts for 99.5% of bitcoin-linked assets on the Ethereum chain.

Next, we look at the concentration of these token holders. If WBTC is the king of Bitcoin tokens, then Maker is the creator of its throne. More than two-thirds (68%) of WBTC tokens are held by Maker as collateral for DAI. Since Maker only approved WBTC as a collateral for DAI on May 3, it can be speculated that Maker may also see a larger share of the growing WBTC market in the future.


WBTC is also occupying more DAI collateral market. In just one month, in the ranking of DAI’s collateral, WBTC surpassed USDC and BAT, and currently only lags behind ETH. WBTC’s collateral accounts for 7.8% of DAI.


Compound is WBTC’s second largest holding agreement, and Compound uses WBTC to support its own cWBTC tokens. cWBTC was launched in July 2019.


Compared with WBTC, HBTC is mainly held by Huobi itself, and Huobi Wallet holds 89% of the share.


Among the four largest BTC tokens, imBTC’s token holdings are scattered. 64 addresses hold 90% of their imBTC; 90% of sBTC is concentrated in 26 addresses; WBTC is relatively more concentrated, 90% of the tokens are held by 14 addresses; and finally HBTC, It is by far the most concentrated, with 99% of HBTC only in 5 wallets. As mentioned above, since most WBTC is held by the DeFi platform, the actual address using WBTC is more than shown here.


From a trading perspective, we see that the motivation behind WBTC came from using it as collateral for DAI in May. From March to April, the number of transactions surged by 61%, and the value of transferred dollars surged by 7 times.

Judging from the number of transactions of other BTC tokens, some trends are very prominent:

1. imBTC dropped sharply in May (probably because Uniswap and were hacked, they used imBTC tokens)

2. sBTC trading has slowed since it peaked in January

3. Consistent with the token holding data, HBTC has only a small number of transactions, and the large number of pBTC transactions created by HBTC has risen sharply since its launch in March, and soon surpassed HBTC and sBTC

The aforementioned pBTC transaction seems to reveal that these nascent tokens are trying to overthrow WBTC’s dominance. All three tokens: pBTC, tBTC and renBTC become a collateralized way of holding BTC in a more decentralized way than the other tokens mentioned above. The data shows that these tokens are still in the early stages. Although the number of pBTC transactions exceeded sBTC in May, the value transferred to sBTC during the same period was only US$1 million, while sBTC was US$4.6 million.

DeFi’s growth on Ethereum is accompanied by the emergence of new Bitcoin tokens. WBTC was the first to be launched and adopted. Since then, it has continuously consolidated its leading position in market share. It is interesting to see if other Bitcoin tokens, including the emerging tBTC and renBTC, can overcome the current first-mover advantage. As people’s interest and acceptance of DeFi continue to grow, the locked Bitcoin assets on the Ethereum chain will increase day by day.

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