Tron’s play for WBTC
Crypto is itself a fast paced industry. Decentralized finance is so fast it is often described as “crypto on steroids.” Each week new technologies are being tested and experimented with as developers scramble to get the first mover advantage in this nascent industry. As is generally the case, regulation lags behind. It is currently inconsistent and unequally applied across international borders.
Competition is strong and in an attempt to steal some glory from the Ethereum network (the de facto standard for decentralized finance) Justin Sun has entered into a strategic alliance with custody specialist BitGo to accommodate wrapped bitcoin (WBTC) tokens.
A wrapped bitcoin is essentially a token in a token. To make bitcoins usable on the Ethereum network they need to meet the ERC20 standard. As bitcoin does not by default it needs to wrapped inside a token that is compatible. Once this has occurred those who hold bitcoin can delve into the world decentralized finance without having to sell their precious bitcoin.
As of the time of writing there is now more than $1.1 billion U.S dollars worth of bitcoin wrapped up as WBTC and on September 24th Three arrows minted 2,316 WBTC tokens, the largest-ever single issuance, for use on the Ethereum blockchain, a record which now may already have been broken.
Wrapping bitcoin increases its utility function. What once was just seen as a store of value can now be collateralized creating borrowing and lending options for holders. Bitcoin had been criticized by some prominent crypto users, who have suggested a Bitcoin is about as useful as a “Pet Rock” but through WBTC its full functionality is unlocked.
Now Tron apparently wants a piece of the rapidly growing DeFi pie. “Our new strategic alliance with Tron creates even greater opportunities for users to expand to other chains and tokenize their BTC,” BitGo CEO Mike Belshe said in a statement. Which means “transacting at a lower cost and faster speed.”
Whilst it is unlikely that developers will abandon Ethereum because of this development it does increase pressure on the Ethereum team to roll out Eth2. Otherwise users and developers alike might start abandoning Ethereum in favour of a network with better throughput and lowers fees.
