The parent company of ETF issuer 21Shares announced Tuesday the launch of its own wrapped Bitcoin token on the Ethereum blockchain.
21.co said its latest product—double 21BTC – aims to “usher in the next phase of decentralized finance (DeFi) and contribute to broader adoption of DeFi.”
You may have heard of “wrapped Bitcoin” and wrapped tokens: how do they work?
A wrapped token allows a cryptocurrency to be used on another blockchain. The best example is Wrapped Bitcoin (WBTC)the 14th largest cryptocurrency, with a market capitalization of $8.8 billion. Intended to represent Bitcoin, it operates on Ethereumthe second largest crypto network and access point for Challenge And NFT.
WBTC allows traders who wish to use their Bitcoin assets in the Ethereum The ecosystem allows this to be done with tokens that are individually backed by Bitcoin. This is how Bitcoin holders can interact with DeFi tools without spending more money on Ethereum or other Ethereum-based tokens.
The token is an important tool in the world of Challenge—crypto products that allow their users to borrow, lend, or trade digital assets without third-party intermediaries. In the past 24 hours, more than $127 million worth of WBTC tokens have changed hands, according to CoinGecko.
Other entities have realized this and are releasing their own institutionally backed versions of tokens, including 21.co’s announcement today.
“21BTC offers users the ability to leverage Bitcoin’s liquidity, but on Ethereum’s DeFi ecosystem,” said Eliézer Ndinga, Head of Digital Asset Strategy and Business Development at 21Shares. Decrypt“This is of vital importance for various DeFi applications, from lending platforms to decentralized exchanges.”
But the craze for wrapped Bitcoin is not without controversy: BitGo, the custodian of WBTC, announcement Last month, it partnered with Hong Kong-based BiT Global to “diversify custody and cold storage operations across multiple jurisdictions” for the token.
The move has drawn some criticism due to BiT Global’s ties to cryptocurrency entrepreneur Justin Sun. Bitcoin DeFi protocol Threshold, which creates a Bitcoin-wrapped token, tBTC, propose a merger with WBTC to “save” it.
Sun spoke out about the controversy last month and said his involvement was “entirely strategic.”
And America’s largest cryptocurrency exchange, Coinbase, last month said It would launch a tokenized version of Bitcoin, cbBTC, on its Base network.
Despite the controversy, one thing is for sure: there is demand for the largest digital asset by market cap on other blockchains, and established companies like 21.co are eager to join the fray.
Edited by Ryan Ozawa
Editor’s note: This article was updated after publication to clarify comment attribution.
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