After the introduction of the UNI token income farm incentive for the WBTC liquidity pool, the supply of Bitcoin tokenized on Ethereum, WBTC, increased significantly.
Summary of content
1. Since 17 September, after the UNI token revenue farm incentive was launched at Uniswap, the number of new WBTC coins has exceeded 15,000, which is worth around US $ 165 million when calculated at US $ 11,000 / BTC;
2. The relative rate of return of the Bitcoin based liquidity pool is higher than that of Ethereum and Chainlink on decentralized financial platforms such as Yarn Finance;
3. After launching an existing Bitcoin-based liquidity pool that supports RenBTC, wBTC and sBTC, Curve added a 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 the total current value of Bitcoin in the DeFi project / protocol has reached 1.2 billion US dollars. The reason for this situation is mostly due to the relatively high return of the Bitcoin-based liquidity pool, so liquidity is starting to shift to a decentralized financial protocol that supports Bitcoin.
Uniswap effect
WBTC (Wrapped Bitcoin) is Bitcoin tokenized on Ethereum. Launched in January 2019. Before the outbreak of decentralized financial income agriculture, WBTC was growing relatively slowly, but now its fixed value has exceeded US $ 800 million. This has increased by nearly $ 500 million since August.
Top: Total value locked WBTC (Source: DeFiPulse)
Uniswap is currently the leading decentralized exchange (DEX) in the crypto industry, and its trading volume has never surpassed centralized exchanges like Coinbase. At this stage, the WBTC-ETH liquidity pool at Uniswap has become the most "attractive" source of Bitcoin liquidity, because it is one of the four liquidities at Uniswap, and injecting liquidity into it can earn UNI token prizes. .
At the time of writing, the WBTC-ETH pool is already the largest liquidity pool at Uniswap, with a scale of US $ 391 million and an astonishing 900% growth rate since 17 September. As shown in the image below, we can see a comparison of the demand sources from other WBTC liquidity pools at 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.
Above: WBTC Liquidity at Uniswap (Source: Uniswap Info)
As Uniswap will no longer add new liquidity pools to support UNI token incentives during the governance grace period, this means that the size of the WBTC-ETH liquidity pool could continue to grow in the next 30 days.
Other liquidity pools that qualify for UNI revenue farms include DAI-ETH, USDT-ETH, and USDC-ETH. Since launch, the size of this liquidity pool 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 receiving increasing attention from investors, leading to an increase in the number of WBTC, renBTC and sBTC being printed on Ethereum. The bitcoins given this token are ERC-20 tokens whose value is backed by the actual bitcoins that are locked in certain smart contracts. Tokenized Bitcoin is compatible with the DeFi platform built on Ethereum.
Recently, some developments of tokenized Bitcoin that deserve attention include:
1. The market value of RenBTC tokenized bitcoin on Curve accounts for 18% of the total tokenized bitcoin value, which is close to US $ 1 billion;
2. YEarn Financial Treasury provides a 30% annual rate of return for sBTC liquidity providers on the Curves platform including RenBTC, WBTC and sBTC; conversely, the other two treasury based on Ether and LINK are expected to be Just 1.73% and return 2.24%.
3. Curve added a new HBTC liquidity pool to its decentralized trading platform, but in the week since its release the pool only added $ 1,300 worth of HBTC.
The high returns from mining liquidity on a decentralized financial platform increase the motivation of investors to hold Bitcoin, but at the same time carry additional smart contract risks. Investors can lose themselves due to fluctuations in decentralized financial markets. Physical Bitcoin is guaranteed. Additionally, tokenized bitcoins minted on Ethereum carry other risks, such as: forced liquidation, token loss, technical failure, and theft.
How Bitcoin on Ethereum will develop in the future and whether a spike in decentralized finance can indirectly increase the Bitcoin price is worthy of concern