On Tuesday, 21Shares’ parent company, 21.co, unveiled its latest innovation: 21BTC, a new wrapped Bitcoin token launched on the Ethereum blockchain. This development marks a significant step in the ongoing evolution of decentralized finance (DeFi), aiming to facilitate broader adoption of DeFi applications.
Wrapped Bitcoin (WBTC) is not a new concept in the world of cryptocurrencies, but it remains a pivotal tool in bridging different blockchain ecosystems. A wrapped token allows a cryptocurrency to be utilized on a different blockchain. WBTC, which operates on Ethereum, exemplifies this by enabling Bitcoin holders to use their assets within the Ethereum network, known for its DeFi and NFT platforms.
WBTC is backed one-to-one by Bitcoin, ensuring that each WBTC token represents a corresponding amount of BTC held in reserve. This allows Bitcoin holders to engage with Ethereum-based DeFi tools without needing to convert their holdings into Ethereum or other Ethereum-based tokens. As of the latest data, WBTC has a market cap of approximately $8.8 billion, highlighting its significant role in the crypto ecosystem. In the past 24 hours alone, over $127 million worth of WBTC tokens were traded, according to CoinGecko.
21.co’s introduction of 21BTC aims to capitalize on the growing trend of integrating Bitcoin with DeFi applications. The new token is designed to leverage Bitcoin’s liquidity while operating within the Ethereum ecosystem. According to 21.co, 21BTC is set to enhance various DeFi applications, including lending platforms and decentralized exchanges."21BTC offers the ability for users to make use of Bitcoin’s liquidity, but on the Ethereum DeFi ecosystem," 21.co told. This aligns with the company’s vision of advancing DeFi and increasing its accessibility.
The launch of wrapped Bitcoin tokens is not without its controversies. Last month, BitGo, the custodian for WBTC, announced a partnership with Hong Kong-based BiT Global to diversify custody operations and cold storage across multiple jurisdictions. This move sparked criticism due to BiT Global’s association with crypto entrepreneur Justin Sun, raising concerns about the strategic motivations behind the collaboration.
In response to these controversies, Bitcoin DeFi protocol Threshold, which mints its own Bitcoin-wrapped token, tBTC, proposed a merger with WBTC to address the issues and "save" it from potential pitfalls. Justin Sun defended his involvement, stating that it was purely strategic and aimed at enhancing the security and efficiency of the wrapped token ecosystem.
Coinbase, the largest cryptocurrency exchange in the U.S., also announced plans to launch its own tokenized version of Bitcoin, cbBTC, on its Base network, further highlighting the growing demand for Bitcoin’s integration into other blockchain environments.
The introduction of 21BTC by 21.co underscores the increasing demand for Bitcoin’s utility across various blockchain networks. As the DeFi space continues to expand, wrapped Bitcoin tokens like 21BTC and WBTC play a crucial role in facilitating cross-chain interactions and broadening the scope of decentralized financial applications. Despite ongoing controversies, the enthusiasm for integrating Bitcoin with other blockchains reflects a robust and evolving market landscape.
September 2024, Cryptoniteuae