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What is Wrapped Bitcoin (WBTC) and How Can DeFi Investors Use It?

Even though DeFi is taking off, a little extra liquidity could prove to be the wind beneath its wings. Powered by 46 partners—and counting—Wrapped Bitcoin (WBTC) is blowing in from all corners of the globe.

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Even though DeFi is taking off, a little extra liquidity could prove to be the wind beneath its wings. Powered by 46 partners—and counting—Wrapped Bitcoin (WBTC) is blowing in from all corners of the globe.

Wrapped Bitcoin (WBTC) is an ERC-20 token, pegged to bitcoin 1:1, that was launched on the Ethereum network on January 31, 2020. As a result, bitcoin can be used in the largely Ethereum-powered DeFi market.

How Does Wrapped Bitcoin Work?

There are three key players in the process of a bitcoin holder getting WBTC: the user, the merchant, and the custodian.

To exchange bitcoin for Wrapped Bitcoin, a user puts in a request to a WBTC merchant. Merchants distribute WBTC in exchange for bitcoin—or the other way around. They have also incorporated a KYC step in the process. The merchants serve as a middleman between the user and the custodians, who are the liquidity pool of the network.

When the merchant presents the transaction request to the custodian, the custodian chooses to either grant or deny the request to either mint or burn WBTC. The minting and burning processes happen via an atomic swap, directly between the merchant and the custodian.

The process is launched when a merchant enters a minting request via an Ethereum smart contract while sending bitcoin to the custodian. At that point, the custodian waits for confirmation on the Bitcoin blockchain, approves the request on the Ethereum network, and the merchant then gets the WBTC.

For the user to get their tokens, they have to enter into a trusted exchange or atomic swap with the merchant. Once the user gets their WBTC, what they have is basically bitcoin “wrapped” in an Ethereum blanket. Hence, the name “Wrapped Bitcoin.”

How Wrapped Bitcoin Benefits the DeFi Space

Liquidity is the foundation of all finance. Without money to lend, financiers have no value. Further, limited liquidity could kill a burgeoning financial movement. If investors were to rush to DeFi and run into one platform after another that didn’t have enough to liquidity, DeFi would quickly get slapped with crippling labels like “insoluble,” “unsustainable,” and others that DeFi-doubters are eager to whip out.

Because bitcoin and the Ethereum blockchain don’t play nice, and DeFi is largely powered by Ethereum, there’s been a thick brick wall between DeFi and bitcoin investors. This wouldn’t be a problem if it weren’t for the fact that BTC clutches on to the vast majority of the digital asset market cap.

Wrapped Bitcoin is a sledgehammer trying to bust down that Berlin-esque wall. If investors continue stepping through the gaps, a flood of liquidity could flow into the DeFi space.

If only 5% of the bitcoin market cap were to move into the DeFi liquidity pool, DeFi’s market cap would hop up 35%.

How to Add WBTC to Your Portfolio

Investors can go through the “wrapping” process using a merchant, or they can purchase WBTC on one of several exchanges.

If you hodl WBTC, its price will rise and fall with that of BTC. Alternatively, you could use it to invest in DeFi protocols.

Fees Associated with WBTC Wrapping

As with most financial services, wrapping with WBTC comes with a cost. There are fees you have to pay to the following entities:

  • Custodian fees. These are collected by the custodian when the merchant chooses to mint or burn wrapped tokens.
  • Merchant fees. The merchant takes a fee from the user as payment for helping them turn their BTC into WBTC.
  • Sidechain transaction fees. To help prevent spam on the sidechain, there is a fee that is shared by all entities that are running a sidechain node.

How DeFi Investors Can Use WBTC to Earn Interest on Bitcoin

DEFI.

There are a few ways you can use WBTC to generate interest on your BTC. You can use one or a combination of multiple platforms.

Lending on Compound

An increasingly common door into the DeFi building is Compound, which now accepts WBTC. Compound works by using an algorithm to calculate interest rates based on common market factors like supply and demand.

If you have a loan, the value of your collateral has to remain above a certain threshold in order to prevent the liquidation of your assets. On the other side of the table, you can lend WBTC to Compound users and earn interest. At the time of writing, the net rate on Compound for WBTC was 2.30%, with a supply APY of 1.44% and a distribution APY of 0.86%.

Yield Farming on Maker

The first step in earning interest on your BTC with Maker is to wrap it into WBTC. You can then use your WBTC to generate DAI. At the time of writing, you had to maintain a liquidation ratio of 150%, and if you end up getting liquidated, you would have to pay a 13% penalty. However, if you lock up your WBTC to generate DAI, the liquidation risks could be worth it.

Once you have generated DAI, you can convert it back into BTC using an exchange, reinvest it, or allow it to continue producing DAI.

Staking on Synthetix

Yield farming on Synthetix with WBTC is fairly straightforward.

  • You first provide your WBTC to the curve liquidity pool, which gives you Curve LP tokens as a reward for your contribution.
  • You then stake your Curve LP tokens in Mintr. Both the staking process and claiming your rewards happen in the LP Rewards tab on Mintr.
  • When you want to cash out, you select “Claim and Unstake” and your tokens are liquidated into SNX and REN, which can be traded for BTC on exchanges like Binance, OKEx, and Bilaxy.

Curve Finance sUSD LP Token Rewards.

WBTC: Good for DeFi, Good for Investors

Wrapped Bitcoin may be exactly what DeFi needs. Because it’s pegged to BTC and users can obtain it via a fairly simple process, its rise may continue. If bitcoin players, big or small, increasingly turn to WBTC, the liquidity boost could help DeFi soar to new heights.

And for investors, WBTC provides a new avenue to earn interest on bitcoin holdings by depositing the token in yield-generating DeFi protocols.

Further reading:

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Source: https://www.bitcoinmarketjournal.com/what-is-wrapped-bitcoin/

Blockchain

Why Uniswap, Cardano, Solana, and Dogecoin Could Become Best-Performing Cryptos Of 2021

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Why Uniswap, Cardano, Solana, and Dogecoin Could Become Best-Performing Cryptos Of 2021

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The year has been a good one so far for altcoins. There’s no denying Bitcoin’s pedigree and influence on the market as it is still the biggest cryptocurrency by far in the crypto space. Having said that, there are a lot of altcoins or relatively smaller and cheaper cryptocurrencies which have attracted investors and newbies looking to diversify their crypto portfolios. As crypto adoption continues to grow so has the interest in it which has been evident in the last few months. Institutional interest is at an all-time high as many traditional companies, firms and institutions are boarding the cryptocurrency bandwagon.

There are a lot of altcoins putting up impressive numbers guaranteed to give back good yields and this article sheds light on four of them.

Uniswap (UNI)

Uniswap is one of the dApps based on the Ethereum blockchain. The project allows users to trade Ethereum tokens through liquidity pools. The DeFi coin boasts of being the first decentralized exchange with the option of a margin and leverage trading.

The UNI coin has two main services, thus delivering and utilizing liquidity. Although it is new in the crypto space as it was released into the market last year, its performance has made it one of the leading DeFi coins on the market.

UNIUSD
UNIUSD Chart By TradingView

Uniswap v3 was released days ago, an upgrade of its protocol and aims to provide better oracles, new fee tiers as well as give users more control over the liquidity they provide. Many analysts believe the coin is expected to blow and with its price at $36, it would be a steal compared to others.

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Cardano (ADA)

Cardano has been one of the popular coins on the crypto market for some while. Its network has a smaller footprint which makes it flexible, more adaptable, and secure. Transactions are faster as it requires less energy, and have interoperability and scalability among its pros.

ADAUSD
ADAUSD Chart By TradingView

Cardano’s recent update has equipped it with the ability to build smart contracts which have attracted a lot of dApp developers, a sector that is blowing up this year. The coin is 4th on the crypto ladder with a trading price of $2.32 which has seen a 27.35% rise within the last seven days.

Solana (Sol)

Another coin that is making a name for itself in the fast-growing DeFi ecosystem is Solana.

Launched in March 2020, the digital project has enjoyed a steady rise, making its way up the crypto ladder with impressive runs. Sol is currently at 16 on the crypto ladder with an impressive market valuation of $14 billion.

SOLUSD
SOLUSD Chart By TradingView

Its Proof-of-History algorithm has the highest speeds of a transaction and offers relatively cheaper transaction fees as compared to other coins such as Ethereum. The digital asset currently trades above $50.

Dogecoin (DOGE)

DOGE has defied many odds to become one of the fastest-growing digital coins on the crypto market presently. Created as a meme coin back in 2013, it has seen a major resurgence taking its price from $0.0076 to an all-time high of $0.7 in less than 21 days led by Elon Musk’s never-ending endorsements.

DOGEUSD
DOGEUSD Chart By TradingView

Dogecoin has seen a surge of over 8000% so far this year and remains one of the cheapest coins to buy. It is currently trading at $0.5, and despite the many controversies surrounding DOGE, it does have what it takes to yield massive progress if adopted by Tesla for payments.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://zycrypto.com/why-uniswap-cardano-solana-and-dogecoin-could-become-best-performing-cryptos-of-2021/

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Blockchain

DOGE Price Analysis: DOGE Breaks Out Of Bull Flag As Alt-coins Continue Rallying

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DOGE coin has been through a wild ride in 2021. Elon Musk has been the biggest influence of the price of Doge as his words have both helped and hurt the Doge. Doge had recently experienced a 50% correction but bulls quickly bought up DOGE as it bounced off its ascending channel it has followed for a month. 

Major support range for DOGE comes in at $0.44-$0.48. If the price of DOGE can hold this support, it is considered bullish for another leg up. To confirm a bullish upswing, DOGE must break and hold $0.56. Confirming a potential bullish leg, the price of DOGE recently broke out of a bullish flag and confirmed it. 

DOGE Price Analysis: DOGE/USDT 1 Day Chart

If DOGE fails to hold major support range, a fall to $0.40 is expected. Near this area lies the 30 MA which has held as support last week when Doge coin fell to $0.36. In addition, the bottom trend of its ascending channel is around the same area. This zone is a massive support for DOGE and can be relied upon if a bearish leg prints. 

The Stochastic RSI has recently corrected to oversold levels. At the time of writing, the strength has revived over the 30 level and must hold for DOGE to continue rising. The MACD has been sideways for a few days which can tell a bigger move is coming. The MACD histogram has been ticking up and is looking for a green bullish tick for the first time in a week. 

DOGE intraday levels 

  • Spot rate: $0.537
  • Trend: Neutral 
  • Volatility: High
  • Support: $0.489
  • Resistance: $0.561

Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Domenic Fiore has a love for the financial markets. He decided to skip the college route to pursue entrepreneurship. He saw the vision to become an entrepreneur and wanted to achieve success from a young age. Domenic owned & operated a car detailing business since the age of 16, along with being a part of two CBD businesses through 2018 & 2019. He started his investment and trading career early trading in 2017 when he bought a newly released cryptocurrency alt-coin and saw 10x return in a few months. He then realized there was much potential and dove head first into learning everything he could. He became very passionate about technical analysis and knew it was his route to financial freedom. Over the last 4 years, Domenic has shared his analysis with many groups and received amazing feedback. Shortly after he wanted to help assist in the pursuit of spreading and helping others achieve success in the trading industry.

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Source: https://coingape.com/doge-breaks-out-of-bull-flag-as-alt-coins-continue-rallying/

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Fundstrat’s Tom Lee Increases Bitcoin Price Target to $1,25,000 Despite Elon Musk’s Turnaround

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Tom Lee, Managing Partner and the Head of Research at Fundstrat Global Advisors who is an avid Bitcoin bull has now increased his Bitcoin price target from $100,000 to $125,000 despite a recent bizarre turnaround by Elon Musk. Musk has recently closed the Bitcoin payment gateway for Tesla cars just a month after availing the service to US customers citing environmental concerns. The claims about bad environmental impact surely took many by surprise given Musk himself is a big advocate for clean energy and the Bitcoin network’s majority mining power input comes from a clean energy source.

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Merchant Token

Lee in an interview said that Musk’s recent comment about Bitcoin could be a result of pressure from investors. He added that Musk’s recent turnaround would not have much of an impact on Bitcoin bulls and the top cryptocurrency would continue to soar higher. He also increased his price target by $25,000 to prove his point. He explained,

“I don’t think it’s going to get people negative on bitcoin, but it is going to get people to focus on the problems that are being created by digital assets. It is probably better to view it as a call to action for the bitcoin industry to focus on renewables or more efficient ways to provide proof of work.”

Lee is among the selected few early Bitcoin proponents who have always maintained that the top cryptocurrency would top $100,000 which until last year seemed more bizarre than far-fetched.

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Is the Recent Market Sell-Off Because of Musk Comments?

Bitcoin price fell nearly 15% on May 12 after Musk announced Tesla’s decision to stop accepting Bitcoin payment. Many believed the market correction was potentially triggered by Musk’s comments, however, on-chain data indicate otherwise. Bitcoin inflow on exchanges had spiked significantly right before Musk’s comments which is a bearish indicator and a sign of sell-off. Thus either people sending Bitcoin onto exchanges were aware of Tesla’s incoming decision or the sell-off was not necessarily triggered by Musk’s comment.

Musk since then has been aggressively promoting and shilling Dogecoin hinting at making necessary development changes to make the meme coin more efficient. He also claimed that he has been in touch with Dogecoin developers but the meme currency network’s developer activity is negligible over the past three years.

To keep track of Crypto updates in real time, Follow us on Twitter & Telegram.

Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
An engineering graduate, Prashant focuses on UK and Indian markets. As a crypto-journalist, his interests lie in blockchain technology adoption across emerging economies.

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Source: https://coingape.com/fundstrats-tom-lee-increases-bitcoin-price-target-to-125000-despite-elon-musks-turnaround/

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