After the introduction of UNI token income farming incentives for the WBTC liquidity pool, the supply of tokenized Bitcoin on Ethereum, WBTC, is growing substantially.
1. Since September 17th, after the UNI token income farming incentives launched on Uniswap, the number of new WBTC coins has exceeded 15,000, which is worth approximately US$165 million if calculated at US$11,000/BTC;
2. The relative return rate of the liquidity pool based on Bitcoin is higher than that of Ethereum and Chainlink on decentralized financial platforms such as yEarn Finance;
3. After launching existing Bitcoin-based liquidity pools supporting RenBTC, wBTC and sBTC, Curve added a brand new HBTC liquidity pool.
In just 24 hours after the launch of the UNI token, the number of WBTC (Wrapped Bitcoin) tokens has increased by 10,800, which means that the total value of Bitcoin currently in the DeFi project/protocol has reached 1.2 billion US dollars. The reason for this situation is largely due to the relatively high returns of Bitcoin-based liquidity pools, so liquidity has begun to shift to these decentralized financial protocols that support Bitcoin.
Uniswap effect
WBTC (Wrapped Bitcoin) is a tokenized Bitcoin on Ethereum. It was launched in January 2019. Before the outbreak of decentralized financial income farming, WBTC grew relatively slowly, but now its fixed value has exceeded US$800 million. It has risen by nearly $500 million since August.
Uniswap is currently the leading decentralized exchange (DEX) in the crypto industry, and its transaction volume once surpassed a centralized exchange such as Coinbase. At this stage, the WBTC-ETH liquidity pool on Uniswap has become the most “attractive” source of Bitcoin liquidity, because it is one of the four liquidities on Uniswap, and injecting liquidity into it can get UNI token rewards. .
At the time of writing, the WBTC-ETH pool is already the largest liquidity pool on Uniswap, with a scale of US$391 million and an astonishing growth rate of 900% since September 17. As shown in the figure below, we can see the comparison of the demand sources of other WBTC liquidity pools on Uniswap. Except for the WBTC-ETH liquidity pool, which hit a new high of nearly 40 million US dollars in 24 hours, the liquidity of other pools has changed. Almost zero.
Since Uniswap will no longer add a new liquidity pool that supports UNI token incentives during the governance grace period, this means that the size of the WBTC-ETH liquidity pool may continue to expand in the next 30 days.
Other liquidity pools eligible for UNI income farming include DAI-ETH, USDT-ETH, and USDC-ETH. Since their launch, the size of these liquidity pools has increased by 880%, 136%, and 142%, respectively.
Bitcoin on Ethereum
At the time of writing, the total value of Bitcoin locked in decentralized financial smart contracts has reached 1.25 billion US dollars.
Due to the relatively high rate of return, Bitcoin liquidity pools and vaults are getting more and more attention from investors, resulting in an increase in the number of WBTC, renBTC and sBTC minted on Ethereum. These tokenized bitcoins are an ERC-20 token whose value is backed by actual bitcoins locked in a specific smart contract. The tokenized bitcoins are compatible with the DeFi platform built on Ethereum.
Recently, some of the developments of tokenized Bitcoin worth paying attention to include:
1. The market value of the tokenized bitcoin RenBTC on Curve accounts for 18% of the total value of the tokenized bitcoin, which is close to 1 billion US dollars;
2. The yEarn Finance treasury provides a 30% annual rate of return for sBTC liquidity providers on the Curves platform including RenBTC, WBTC and sBTC; in contrast, the other two treasuries based on Ether and LINK are expected to Only 1.73% and 2.24% return.
3. Curve added a new HBTC liquidity pool to its decentralized trading platform, but within a week of its release, the pool only added HBTC worth $1,300.
The high returns of liquidity mining on decentralized financial platforms increase investors’ motivation to hold Bitcoin, but at the same time it also brings additional smart contract risks. Investors may lose themselves due to fluctuations in the decentralized financial market. Mortgage of physical bitcoin. In addition, the tokenized bitcoin minted on Ethereum has other risks, such as: forced liquidation, token loss, technical failure, and theft.
How the Bitcoin on Ethereum will develop in the future and whether the upsurge of decentralized finance can indirectly boost the price of Bitcoin is worthy of our attention.
