What is Wrapped Bitcoin (WBTC)?
Wrapped Bitcoin (WBTC) is an ERC-20 token on Ethereum that represents Bitcoin 1:1. Each WBTC is backed by 1 BTC held in custody, allowing Bitcoin holders to access Ethereum's DeFi ecosystem.
How WBTC Works
- Minting: Send BTC to a custodian → Receive WBTC on Ethereum
- Trading: Use WBTC in DeFi: Uniswap, Aave, Compound
- Burning: Return WBTC → Receive BTC back
WBTC vs renBTC vs tBTC
| Feature | WBTC | renBTC | tBTC |
|---|---|---|---|
| Supply | 150,000+ BTC | 5,000+ BTC | 1,000+ BTC |
| Custody | Centralized (BitGo) | Decentralized (RenVM) | Decentralized (Threshold) |
| Min Mint | 0.01 BTC | 0.001 BTC | 0.01 BTC |
| Fee | 0.2% | 0.1-0.3% | 0.2% |
DeFi Use Cases for WBTC
- Lending: Earn yield on Aave, Compound (3-5% APY)
- Trading: Provide liquidity on Uniswap, Curve
- Collateral: Borrow stablecoins against WBTC on Maker
- Yield Farming: Stake WBTC in DeFi protocols
Risks of Wrapped Bitcoin
- Custodial Risk: WBTC relies on BitGo holding real BTC
- Smart Contract Risk: Ethereum bugs could lock funds
- Depeg Risk: WBTC could trade below 1 BTC value
- Regulatory Risk: Custodians could be forced to freeze assets
