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BTC on Ethereum is blowing up.
After starting the year with <1,000 there is now over 16,000 ($150 million)
This is in large part due to wBTC which is on its way to become the “tether of pegged bitcoin”
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After starting the year with <1,000 there is now over 16,000 ($150 million)
This is in large part due to wBTC which is on its way to become the “tether of pegged bitcoin”
1/
With tokens pegged to external assets there is a fundamental tradeoff:
Scalability vs. Trustlessness
Scalability vs. Trustlessness
We're seeing this play out with stablecoins where directly redeemable tokens can scale much quicker than more trustless, crypto collateralized versions which are less capital efficient and require arbitrageurs to assume more risk https://messari.io/chart/stablecoin-market-cap-47A96D06
This is why tether/USDC have reached billions while Dai has not and remains stubbornly above the peg, unable to meet the demand https://messari.io/chart/stablecoin-prices-C13C145F
To exacerbate this trend, users simply don’t care about the mechanism with which these assets are created.
Tether has been mired in controversy yet even when the fears come true… it stays king https://www.bloomberg.com/news/articles/2019-04-30/tether-says-stablecoin-is-only-backed-74-by-cash-securities
Tether has been mired in controversy yet even when the fears come true… it stays king https://www.bloomberg.com/news/articles/2019-04-30/tether-says-stablecoin-is-only-backed-74-by-cash-securities
Because what do users actually care about? What the token can do for them. This means:
Low slippage
Holding its peg
Not getting censored/blacklisted
Usability across DeFi applications (which we’re continuing to see heightened demand for)
Low slippage
Holding its peg
Not getting censored/blacklisted
Usability across DeFi applications (which we’re continuing to see heightened demand for)
For these reasons wBTC is poised to continue its dominance in the short to medium term
That being said, there’s still the looming threat of government intervention once these assets grow large enough to catch regulator’s attention
That being said, there’s still the looming threat of government intervention once these assets grow large enough to catch regulator’s attention
No one cares about trustlessness. Until you have to
If blacklists become rampant or if they’re forced into a KYC’d whitelist model then the trustless alternatives will shine
But until then we’ll likely continue watching wBTC dominate https://messari.io/article/the-tether-ization-of-wbtc
If blacklists become rampant or if they’re forced into a KYC’d whitelist model then the trustless alternatives will shine
But until then we’ll likely continue watching wBTC dominate https://messari.io/article/the-tether-ization-of-wbtc
