{"id":117214,"date":"2020-11-21T18:50:08","date_gmt":"2020-11-21T15:50:08","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/stretched-thin-wrapped-bitcoin-assets-may-encourage-supply-crisis\/"},"modified":"2020-11-21T18:50:08","modified_gmt":"2020-11-21T15:50:08","slug":"stretched-thin-wrapped-bitcoin-assets-may-encourage-supply-crisis","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/stretched-thin-wrapped-bitcoin-assets-may-encourage-supply-crisis\/","title":{"rendered":"# Stretched thin? Wrapped Bitcoin assets may encourage supply crisis"},"content":{"rendered":"

“# Stretched thin? Wrapp<\/a>ed Bitcoin assets may encourage supply crisis <\/strong>”
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In a blog post<\/a> of Friday, Binance re-introduced BTCB to the world \u2014 a wrapped Bitcoin asset intended to bring liquidity from the world’s largest cryptocurrency, BTC, to Binance Smart Chain’s DeFi (decentralized finance) ecosystem.\u00a0<\/p>\n

However, hodlers may be cheering the renewed interest in BTCB for a different reason: each Bitcoin locked on BSC may contribute to a looming BTC supply crisis. <\/p>\n

First announced last year, Binance initially saw wrapped Bitcoin solely as a vehicle for traders to obtain cross-chain asset exposure without leaving BSC. Since then, however, the utility of wrapped Bitcoin has boomed due to the precocious maturation of the DeFi ecosystem. <\/p>\n

For instance, WBTC \u2014 a wrapped Bitcoin token on Ethereum \u2014 has enjoyed massive success since its January 2019 launch: it currently ranks as the #14 cryptocurrency by marketcap, and has found significant adoption in protocols such as Aave and Uniswap, whose contracts both rank among the top-10 holders of WBTC.\u00a0<\/p>\n

In their blog, Binance noted that similar adoption may be possible for BTCB. The wrapped Bitcoin could be used to mint stablecoins with BSC-native protocols such as QIAN and Venus; as collateral for lending protocols such as CREAM; and in yield farming and liquidity mining protocols such as Beefy, Bakery, and Pancake.\u00a0<\/p>\n

According to what Binance calls a \u201cProof of Assets\u201d page<\/a>, there are currently over 9,600 Bitcoin on BSC \u2014 over $181 million worth. However, the blog post specifies that only 2,000 are circulating.\u00a0<\/p>\n

Other smart contract-enabled chains intend to compound the growing scarcity. Solana\u2019s cross-chain Wormhole project will turn ERC-20 tokens into SPL tokens, including WBTC, and likewise, Interlay is using support from a Web3 Foundation grant to build a trustless<\/a> bridge bringing wrapped Bitcoin to Polkadot. Interlay will launch in early 2021.<\/p>\n

Particularly if the success of wrapped and cross-chain Bitcoin assets continue to grow, institutions looking to hoover the BTC supply may well be faced with mounting scarcity. Aaron Wright, the co-founder of OpenLaw, pointed to such a possible future in a Tweet:<\/p>\n

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0.6%+ of Bitcoin is now wrapped and being put to work on Ethereum (and growing). <\/p>\n

What happens when it hits 10%? pic.twitter.com\/4dGT0yXHBP<\/a><\/p>\n

\u2014 Aaron Wright (@awrigh01) November 17, 2020<\/a><\/p><\/blockquote>\n