What is the process of wrapping BTC?

3 answers

• sidecarmonkey1Nov 20, 2020 · 5 years ago
  Wrapping BTC is the process of tokenizing Bitcoin and representing it on a different blockchain. It allows BTC holders to use their Bitcoin in decentralized finance (DeFi) applications. The process involves locking up BTC in a smart contract and minting an equivalent amount of wrapped BTC (WBTC) tokens on the Ethereum blockchain. These WBTC tokens can then be used in various DeFi protocols, such as lending, borrowing, or trading. The wrapped BTC can be redeemed for the original BTC at any time. Overall, wrapping BTC enables Bitcoin to be utilized in the expanding DeFi ecosystem.
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• McCracken RavnJun 04, 2021 · 4 years ago
  Wrapping BTC is like putting Bitcoin in a fancy dress and making it compatible with other blockchains. It's done by locking up BTC and creating a representation of it on a different blockchain, usually Ethereum. This process allows BTC holders to access the benefits of DeFi without selling their Bitcoin. They can use their wrapped BTC in lending platforms, decentralized exchanges, or other DeFi applications. It's a way to bridge the gap between Bitcoin and the exciting world of decentralized finance.
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• Huy MadridFeb 29, 2024 · 2 years ago
  Wrapping BTC is a process where Bitcoin is locked up and represented as an ERC-20 token on the Ethereum blockchain. This is done through a custodian who holds the BTC and mints an equivalent amount of wrapped BTC tokens. These tokens can then be used in various DeFi platforms and applications. It's important to note that wrapping BTC introduces counterparty risk, as the custodian holds the underlying BTC. However, it provides BTC holders with the ability to participate in the growing DeFi space and access the benefits of Ethereum-based applications.
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