Stretched thin? Wrapped Bitcoin assets may encourage supply crisis

Stretched thin? Wrapped Bitcoin assets may encourage supply crisis


In a blog post of Friday, Binance re-introduced BTCB to the world — a wrapped Bitcoin asset intended to bring liquidity from the world’s largest cryptocurrency, BTC, to Binance Smart Chain’s DeFi (decentralized finance) ecosystem. 

However, hodlers may be cheering the renewed interest in BTCB for a different reason: each Bitcoin locked on BSC may contribute to a looming BTC supply crisis.

First announced last year, Binance initially saw wrapped Bitcoin solely as a vehicle for traders to obtain cross-chain asset exposure without leaving BSC. Since then, however, the utility of wrapped Bitcoin has boomed due to the precocious maturation of the DeFi ecosystem.

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For instance, WBTC — a wrapped Bitcoin token on Ethereum — has enjoyed massive success since its January 2019 launch: it currently ranks as the #14 cryptocurrency by marketcap, and has found significant adoption in protocols such as Aave and Uniswap, whose contracts both rank among the top-10 holders of WBTC. 

In their blog, Binance

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