Tokenized Bitcoin on Ethereum and Tron: DeFi adaptation explodes

11. Oktober 2020 By admin Bitcoin

Bitcoin vs. Ethereum: Which Miners are ahead?

In the wake of the recent hype of decentralized finance projects (DeFi), the tokenization of Bitcoin on Tron and Ethereum is progressing inexorably.

Bitcoin is rapidly establishing itself in the DeFi sector. In the last two months alone, more than $900 million worth of Immediate Bitcoin app has been transferred to Ethereum Blockchain through the Wrapped Bitcoin (WBTC) tokenization protocol. Overall, the amount of bound Bitcoin on the Ethereum network has increased by 900 percent in the last two months.

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With WBTC, users can exchange BTCs for wrapped Bitcoin, an ERC-20 token that is coupled to Bitcoin. Similar to Tether (USDT), which is linked to the US dollar, the WBTC token represents the current Bitcoin exchange rate.
Wrapped Bitcoin booming in the Ethereum DeFi sector

This gives Bitcoin Hodler access to the diverse DeFi ecosystem. In addition, tokenization enables the Bitcoin network to scale, since Bitcoin on Ethereum can take advantage of all the benefits of an ERC-20 token.

In addition, WBTC is currently the fifth largest DeFi protocol and accounts for almost ten percent of the capital deposited on the Ethereum block chain.

DeFi Pulse Ranking

In the first half of 2020, the number of Bitcoin bound on the Ethereum network grew from 4 million dollars to 36 million dollars. The DeFi hype in the third quarter, significantly demonstrates the extreme increase in demand in the DeFi sector.

Furthermore, the hype about tokenized Bitcoin has benefited tokenization protocols such as Ren (REN). Ren’s Virtual Machine (VM), which was launched at the end of May, now comprises more than $300 million of tokenized Bitcoin. Over the same period, the REN exchange rate has increased by approximately 180 percent.

Tron DeFi project takes part in the hype about tokenized Bitcoin

Tron CEO Justin Sun has made several recent attempts to attract investors to Tron’s DeFi sector. On September 16th, Tron announced that community-driven DeFi protocol Sun (SUN).

SUN serves as a governance token for the creation of new mining pools and is the center of the DeFi ecosystem of the Tron block chain.

Similar to Uniswaps UNI tokens, SUN can be minted by providing liquidity. Since a few days it is possible to mine SUN tokens using tokenized Bitcoin.

According to a medium post of the Tron Foundation, the SUN token will also serve as a „transit center“ for block-chain-wide transactions in the future.

Bitcoin on the Tron block chain

Since Tron released its TRC-20-bitcoin on September 30, total committed capital has already exceeded $20 million.

The trend toward Bitcoin tokenization is advancing at a rapid pace. Until a few years ago, probably few would have suspected that this would partially solve the scaling problem of Bitcoin over a second-layer network.

Nevertheless, there are some risks involved in tokenizing Bitcoin on a different block chain.