Home > NEWS > Wrapped Bitcoin supply drops to negative after 11,500 wBTC burn linked to Celsius

Wrapped Bitcoin supply drops to negative after 11,500 wBTC burn linked to Celsius

Wrapped Bitcoin garnered DeFi traders’ support in the 2021–22 bull season, but the demand started to fade when numerous crypto contagions led to redemptions.

After setting the second-largest single-day incineration record on Feb. 27, the supply of encapsulated bitcoin (WBTC) fell to its lowest level since May 2021.

A total of 11500 WBTC ($260 million) associated with the bankrupt password borrower Celsius were damaged, resulting in a negative growth rate. At this stage, the overall supply of packaged tokens is 164396 WBTC, with a monthly aggregate growth rate of-7.39 per cent.

WBTC is based on ethernet's ERC-20 dynamic password, which reflects the value of bitcoin and is linked to the share price of bitcoin (BTC) at 1:1. In 2019, BitGo developed WBTC in cooperation with REN, a blockchain technology interoperability agreement, and Kyber, a multi-chain liquidity service platform. WBTC is managed by the grass-roots autonomous organization WBTC DAO, which has more than 30 team members.

When the store owner wants to swap BTC for WBTC, they run the Burn transaction and inform the custodian. The store transfers the real bitcoin to the escrow detailed address on the bitcoin block chain, which is locked. Once it is connected to the real BTC, the escrow detailed address forges the equivalent BTC in the WBTC in the Etherum.

As an ERC-20 dynamic password, WBTC transfers money as fast as normal bitcoin, but the key advantage of WBTC is that it integrates into the world of ethersquare wallets, decentralized applications and blockchain smart contracts.

At the peak of the bull market, packaged tokens became one of the most popular tools in the fragmented financial ecosystem. The supply of WBTC peaked at $285000 in April 2022, when the price of BTC exceeded $48000.

However, with the advent of the bear market in the stock market and countless password infections, the requirements gradually dissipated. The first sign of a reduction came after Terra collapsed, driving several password borrowers to redeem her WBTC. According to a report, Celsius Network redeemed about 9000 WBTC in the growing demand for withdrawals.

A similar situation occurred after the collapse of FTX in November 2022, when it turned out that the bankrupt password trading center had tried to redeem 3000 WBTC before registering bankruptcy. After the collapse of FTX in November last year, WBTC experienced the most influential coin redemptions in the monthly summary, with more than 28000 WBTC redemptions of initial coins.

The spread of the sales market caused by the collapse of FTX also makes WBTC linked to the original value of BTC. Although the decline is only about 1.5%, it has caused serious concern about whether such generation of tokens is a feasible way to transfer value.

by wjb news
© 2023 WJB All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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