(WBTC) is a token that represents bitcoin on the Ethereum network. WBTC provides a way of using bitcoin in smart contracts
and makes the world’s largest cryptocurrency more accessible on decentralized exchanges (DEX). The wrapped bitcoin price tracks that of bitcoin because the two are locked in a 1:1 ratio. In essence, the protocol allows bitcoin holders to exchange their bitcoin for an equivalent number of WBTC tokens, which can be put to work on Ethereum and used to access decentralized finance
Wrapped bitcoin price
Because of the 1:1 mapping with bitcoin, the WBTC price tends to track that of the larger cryptocurrency. On Oct. 20, 2021, WBTC reached a record-high price of $66,109.97 on the same day as bitcoin.
How does Wrapped Bitcoin work?
Wrapped bitcoin uses smart contract functionality for bitcoin transfers to provide a way for bitcoin holders to access DeFi. In doing so, it brings the greater liquidity of the world’s largest cryptocurrency to the DeFi arena.
For new WBTC to be produced, or minted, a so-called merchant places a request with another party, the custodian. WBTC’s white paper
specifies that the merchant sends bitcoin to the custodian, which mints the WBTC and sends it to the merchant’s wallet on the Ethereum blockchain. The merchant can then swap the wrapped bitcoin with an end user in exchange for the equivalent amount of bitcoin. Merchants are responsible for carrying out know-your-customer and anti-money laundering processes with the end users.
Custodians are the institutions that hold the backing bitcoin and mint the token. For WBTC, BitGo is the sole custodian as of October 2021. The founding merchants were Kyber Network and Ren, though others have now joined. In June 2021, it was reported that more than 1% of bitcoin
was held in wrapped bitcoin tokens.
Removing WBTC from circulation – for example when a user wants to convert WBTC back to bitcoin – is accomplished through burning, a process that can be carried out only by a merchant. The merchant calls the “burn” function in the governing contract, and its WBTC balance is reduced. The custodian is then free to release the held bitcoins to the merchant, who can reimburse the end user.
Proof of assets is shown on the protocol’s web page
Key events and management
Wrapped bitcoin was announced in October 2018
and officially launched in January 2019. It was developed by BitGo, Kyber Network and Ren, who retain their roles in the protocol.
The network is managed by a decentralized autonomous organization (DAO), which votes on adding or removing custodians and merchants. Current members of the DAO
are listed on the website.