Why ETF Issuer 21Shares Is Launching a New Wrapped Bitcoin on Ethereum
ETF issuer 21Shares is making a bold move by launching its own “wrapped” Bitcoin token on the Ethereum blockchain. The parent company, 21.co, believes that this new product, called 21BTC, will drive the next phase of decentralized finance (DeFi) and contribute to the broader adoption of DeFi.
If you’re unfamiliar with the concept of wrapped tokens, they allow a cryptocurrency to be used on a different blockchain. The most notable example is Wrapped Bitcoin (WBTC), which has a market cap of $8.8 billion and represents Bitcoin on the Ethereum network. This enables Bitcoin holders to interact with DeFi tools without needing to acquire additional Ethereum or Ethereum-based tokens.
WBTC has become an essential tool in the world of DeFi, facilitating borrowing, lending, and trading of digital assets without the involvement of third-party intermediaries. In the past 24 hours alone, over $127 million worth of WBTC tokens have been traded.
Recognizing the demand for Bitcoin liquidity within the Ethereum DeFi ecosystem, 21.co aims to provide users with the ability to leverage Bitcoin’s liquidity on Ethereum. This offering will be particularly valuable for various DeFi applications, including lending platforms and decentralized exchanges.
However, the rise of wrapped Bitcoin has not been without controversy. For instance, WBTC’s custodian, BitGo, recently announced a partnership with BiT Global to diversify custody operations and cold storage for the token. This collaboration faced criticism due to BiT Global’s association with crypto entrepreneur Justin Sun. Another Bitcoin DeFi protocol, Threshold, even proposed a merger with WBTC to “save” it.
In response to the controversy, Justin Sun clarified that his involvement was purely strategic. Additionally, Coinbase, the largest crypto exchange in the United States, announced its plan to launch cbBTC, a tokenized version of Bitcoin, on its Base network.
Despite the controversies, the demand for Bitcoin on alternative blockchains remains evident, leading reputable companies like 21.co to enter the space. As the DeFi industry continues to evolve, wrapped Bitcoin tokens are expected to play a crucial role in fostering greater accessibility and liquidity.