Wrapped Bitcoin (WBTC)
Bitcoin's liquidity, unlocked on Ethereum DeFi
Approximate Price
~$97,000
Market Cap
~$12B
Token Type
ERC-20
Peg
1:1 with BTC
What is Wrapped Bitcoin?
Wrapped Bitcoin (WBTC) is an ERC-20 token on the Ethereum blockchain that represents Bitcoin at a 1:1 ratio. Each WBTC token is backed by exactly one Bitcoin held in reserve by a custodian, making it possible for Bitcoin holders to participate in Ethereum's vibrant decentralized finance (DeFi) ecosystem without selling their Bitcoin exposure. WBTC was launched in January 2019 as a collaborative effort between multiple DeFi projects and custodians.
Bitcoin, while being the most valuable and widely recognized cryptocurrency, operates on its own blockchain with limited smart contract functionality. Ethereum, on the other hand, offers a rich ecosystem of programmable financial applications but lacks direct access to Bitcoin's massive liquidity pool. WBTC bridges this gap by tokenizing Bitcoin on Ethereum, combining Bitcoin's store-of-value properties with Ethereum's smart contract capabilities.
The WBTC ecosystem is governed by a decentralized autonomous organization (DAO) comprising merchants, custodians, and community members who oversee the minting and burning processes. On-chain proof of reserves allows anyone to verify that each WBTC token is fully backed by Bitcoin held in custody, ensuring transparency and trust.
How WBTC Works
Custodial Model
WBTC operates through a custodial model involving three key participants: custodians who hold the actual Bitcoin, merchants who initiate minting and burning transactions, and users who hold and trade WBTC. When a merchant requests new WBTC, they send Bitcoin to the custodian, who then mints an equivalent amount of WBTC on Ethereum. The process reverses for redemption: WBTC is burned and Bitcoin is released from custody.
Proof of Reserves
Transparency is maintained through on-chain proof of reserves. The Bitcoin backing each WBTC token is held at publicly verifiable Bitcoin addresses, and the total WBTC supply on Ethereum can be compared against the Bitcoin reserves at any time. This allows anyone to independently verify that WBTC is fully collateralized, without relying solely on third-party audits.
DAO Governance
The WBTC DAO governs the protocol, managing the addition and removal of merchants and custodians, protocol upgrades, and treasury management. Key decisions regarding the WBTC smart contracts, custody arrangements, and operational processes are subject to DAO governance, providing a degree of decentralized oversight over the centralized custody model.
Key Features
Bitcoin in DeFi
WBTC unlocks Bitcoin's trillion-dollar market cap for use in Ethereum DeFi protocols, enabling BTC holders to lend, borrow, provide liquidity, and earn yield without selling their Bitcoin exposure.
1:1 Bitcoin Backing
Every WBTC token is backed by exactly one Bitcoin held in custody, with on-chain proof of reserves allowing anyone to verify the 1:1 backing in real-time.
ERC-20 Compatibility
As a standard ERC-20 token, WBTC is compatible with the entire Ethereum ecosystem including wallets, DEXs, lending platforms, yield aggregators, and any smart contract that supports ERC-20 tokens.
Deep Liquidity
WBTC has deep liquidity on Ethereum DEXs and is widely accepted as collateral across major DeFi protocols like Aave, Compound, and MakerDAO, making it easy to trade and use.
Faster Transactions
While Bitcoin transactions take 10-60 minutes to confirm, WBTC transactions on Ethereum settle in about 12 seconds, and on Layer 2 networks in under 2 seconds.
Transparent Custody
Bitcoin reserves are held at publicly auditable addresses and governed by a DAO, providing transparency and community oversight of the custodial arrangement.
Use Cases
- DeFi Collateral: Use WBTC as collateral on lending platforms like Aave, Compound, and MakerDAO to borrow stablecoins or other tokens while maintaining Bitcoin exposure.
- Liquidity Provision: Provide WBTC in trading pairs (WBTC/ETH, WBTC/USDC) on Uniswap, Balancer, and Curve to earn swap fees and liquidity mining rewards.
- Yield Generation: Deposit WBTC in yield aggregators and vaults to earn passive income on your Bitcoin holdings through automated DeFi strategies.
- Cross-Chain Exposure: Hold Bitcoin exposure on Ethereum without maintaining a separate Bitcoin wallet or dealing with Bitcoin network complexity and fees.
- Leveraged Trading: Borrow against WBTC to create leveraged positions, or use WBTC in margin trading protocols to amplify trading strategies.
- Portfolio Diversification: Include WBTC in Ethereum-based portfolio strategies alongside ETH, stablecoins, and DeFi tokens for diversified on-chain portfolios.
How to Trade WBTC on ChainBridge
- Connect your wallet using MetaMask, WalletConnect, or any supported wallet through RainbowKit.
- Select WBTC as your source or destination token on the swap page.
- Enter the amount you want to trade. ChainBridge's Smart Order Router compares WBTC prices across 7 DEX aggregators to find the best execution.
- Review the quote to see the optimal route, estimated output, and gas costs.
- Confirm the transaction in your wallet and receive your tokens.
ChainBridge also supports native BTC swaps through Thorchain integration, allowing you to swap between native Bitcoin and Ethereum assets directly without wrapping. For cross-chain WBTC transfers, use our bridge feature to move WBTC between Ethereum, Arbitrum, Optimism, and other supported networks.