Binance, one of the most recognizable crypto exchanges, with the highest share of the trading volume, is chasing the ongoing DeFi hype. Binance has recently announced the listing of another Defi token, used for collateral, called Wrapped-Bitcoin (WBTC). This listing is seen as Binance capitalizing on the rising demand for the token as well as for DeFi tokens.
Wrapped-Bitcoin is an ERC-20 based token device to be used as a form of collateral in the defi ecosystem. As per the announcement made by the exchange, the WBTC token would be available for treading on the exchange from August 31st. The value of WBTC is pegged against the value of one bitcoin.
The WBTC token was a collaborative effort by major defi players in the space, including the likes of BitGo, Ren, Dharma, Kyber Network, Compound, MakerDAO, and the Set Protocol. The aim behind creating the WBTC token was to offer more liquidity in the defi ecosystem.
The WBTC token has been listed against Ethereum and Bitcoin for trade, and users on the platform can start investing and trading immediately.
How Will the WBTC Function?
Decentralized Finance (Defi) has become the talk of the crypto world in 2020 as the market grew exponentially over the first half of 2020. Defi protocols use Collateral Debt Position (CDP), where users can put Ether or ERC-20 based tokens as collateral and withdraw loan in a stablecoin.
When the popularity of the defi ecosystem grew, and more number of investors started venturing into the ecosystem, liquidity became an issue. As a result, the major players began looking for different ways to offer liquidity, and the ERC-20 token arose as the best bet.
WBTC soon became quite popular among investors, and at one point, the amount of wrapped bitcoin locked in defi protocols was significantly more than the amount of bitcoin in the lightning network.
Binance has been known to conquer all aspects of the crypto ecosystem and has proven its mettle in both the spot trading market and futures trading market. Given the growing interest of exchange in the defi, it would not be a big surprise if Binance emerges as one of the key players in the near future for the defi ecosystem.