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WBTC's market value has risen spectacularly and DeFi's market has expanded rapidly

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With the strong growth of centralized financial markets in 2020, wBTC shows the dominance of crypto assets relative to other tokens

Original title: "wBTC market Value up 27834% this year, DeFi Strong in 2020"

Source: LongHash

Data on Skew suggests that wBTC's market value has surpassed $1bn. This illustrates the strong growth of the decentralized finance (DeFi) market in 2020, as well as NBSP; WBTC's dominant position relative to other cryptographic assets in tokens.

WBTC is an ERC 20 token that reflects the value of bitcoin on the Ethereum blockchain. The token was introduced in January 2019 by key DeFi practitioners including BitGo, Compound, MakerDAO and Kyber.

In January 2020, wBTC's market value hovered around $4 million. As of Oct. 18, wBTC's market value was above $1.19 billion.

As of October 13, wBTC represented nearly 15% of the total market value of all DeFi tokens on Ethereum, showing "explosive growth".

The implications behind wBTC demand growth

The demand for wBTC stems largely from the compatibility of the token with the DeFi protocol on Ethereum. Since bitcoins cannot be sent directly to the Ethereum blockchain, bitcoin users must exchange BTC for wBTC to use the DeFi service running on Ethereum.

When bitcoin flows into Ethereum in the form of wBTC, users can use wBTC on ethereum and DeFi protocols. When the BTC is converted to wBTC, it is stored in the BitGo Trust, one of the leading companies involved in creating wBTC. WBTC is securely under BitGo's custody until it is converted back into Bitcoin.

WBTC is typically used to provide liquidity to a decentralized exchange (DEX), which in turn provides earnings to holders of wBTC in return. Despite the risks, wBTC allows users to earn a steady income from their BTC.

The growing demand for wBTC means that more and more investors are entering the DeFi market, probably lured by the promise of using BTC to generate revenue.

According to several reports, it is not just the retail market that has seen a surge in interest in DeFi as a way to generate income from existing assets. Genesis Trading, a cryptocurrency firm that serves institutional investors, also saw significant interest in using cryptocurrency assets to generate revenue in its second-quarter report. The company wrote:

"In the second quarter of the return on assets is a major issue for encryption demand. Indeed, the yield driving market of encryption and other asset classes, but over the past three months, the market seems particularly centered on earnings. This is probably due to the low volatility, or is due to the exponential growth of infrastructure and product creativity, but since this quarter we have seen in a number of ways to present mass recovery of interest."

On the Ethereum blockchain, there are many types of bitcoin assets in token form that both retail and institutional investors can use in DeFi. Besides wBTC, there are tBTC, sBTC, rBTC, imBTC and hBTC to choose from. But wBTC has emerged as the market leader, accounting for 73 percent of the bitcoinage on Ethereum.

Why is wBTC so popular?

There are three possible reasons behind wBTC's dominant advantage over other cryptographic tokens. First of all, wBTC has been the leading token Bitcoin asset, so it has a strong network effect. Second, the head exchanges have started to support wBTC. Finally, it is widely used in decentralized exchanges.

On October 19, Coinbase Pro, a leading CRYPTOcurrency exchange in the United States, officially announced its support for wBTC. This means that traders on Coinbase can easily trade between bitcoin and wBTC, increasing liquidity and availability.

As major exchanges begin to support wBTC, more and more wBTC is flowing into decentralized exchanges to provide liquidity. Hayden Adams, the founder of Uniswap, calls it NBSP; in circulation; 0.15% of the total BTC was on Uniswap. He said:

"It may not be that crazy, but think of the number of bitcoins, about 29,000 BTC -- about 0.15% of all BTC's in existence -- currently on the Uniswap protocol."

The support of the major exchanges, the overall growth of DeFi, the increased use of decentralized exchanges, and its network effects may be behind wBTC's dominant position in the cryptographic assets area of scrip.