Wrapped Bitcoin is now being traded more than ever on Uniswap, as Bitcoin holders put their assets to work on the ETH blockchain.
22Bitcoin’s price is nearing its all-time high, however, that is not the only metric rising to record levels, as Wrapped Bitcoin trading on the Uniswap exchange continues to progress.
Uniswap trading volume for WBTC rose to a new single-day all-time high of around $143 million last February 6, this is part of a stunning rise that has seen Bitcoin worth hundreds of millions of dollars make its way into the Ethereum blockchain.
WBTC, or Wrapped Bitcoin, has come into its own as a component of the progressing DeFi ecosystem since the summer of 2020. Increased decentralized exchange volume justifies that the appetite for on-chain crypto trading is still on the upswing.
DeFi, or decentralized finance, uses automatically executed scripts known as smart contracts to give financial goods and services like loans, asset swaps, and interest-bearing deposits with the use of decentralized blockchain networks rather than trusted third parties like banks. DeFi is being developed on different blockchains, but the vast majority of volume and activity now located on the Ethereum network.
DeFi offers many opportunities to earn interest on deposits into liquidity or borrowing pools, but Bitcoin and Ethereum use incompatible tech for their blockchain networks. Wrapped Bitcoin was created to help Bitcoin holders get in on the action; by depositing native Bitcoin with a network of trusted custodians, BTC holders can get WBTC in return at a 1:1 ratio.
WBTC also makes a way for DeFi traders and other Ethereum network users to have exposure to Bitcoin without the need to set up native BTC wallets and infrastructure. It could help explain Uniswap WBTC volume hit all-time highs within days of Bitcoin prices pushing to new heights.
WBTC volume had been quickly rising for many months now, from an average of less than $1 million per day to closer to $100 million per day by the beginning of February 2020. Together with other Bitcoin-on-Ethereum tokens like renBTC and tBTC, Bitcoin on the Ethereum blockchain is also recently at its highest-ever level, over 166,000 BTC or over 0.75% of the entire Bitcoin supply.
DeFi keeps on igniting and is attracting more Bitcoin than ever as the bull market snowball effect continues. And with Ethereum the de-facto platform for enabling crypt-assets to work. How many more BTC will find their way onto the dominant DeFi chain.
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