Wrapped Bitcoin (WBTC) is one of the most influential innovations in the decentralized finance (DeFi) ecosystem, bridging the gap between Bitcoin’s dominant value store and Ethereum’s expansive smart contract capabilities. As of today, the WBTC price stands at US$107,430.48**, with a **24-hour trading volume of $210.78 million. Over the past day, WBTC has seen 0.00% change, reflecting a period of market stability. The circulating supply matches the maximum supply at 163,106 WBTC, indicating that all available tokens have already been issued.
This precise parity between circulating and max supply underscores the strict 1:1 backing model that defines WBTC — each token is fully backed by a corresponding amount of Bitcoin held in reserve.
What Is Wrapped Bitcoin?
👉 Discover how WBTC unlocks the full potential of Bitcoin across blockchains.
Wrapped Bitcoin (WBTC) is an ERC-20 token pegged 1:1 to Bitcoin (BTC) and built on the Ethereum blockchain. It enables Bitcoin — the world’s largest cryptocurrency by market cap — to function within Ethereum-based decentralized applications (dApps), including lending platforms, decentralized exchanges (DEXs), yield farming protocols, and more.
Because native Bitcoin cannot directly interact with Ethereum’s smart contracts, WBTC acts as a "wrapped" version that conforms to Ethereum’s technical standards. This transformation allows BTC holders to participate in DeFi without selling their assets, effectively bringing Bitcoin’s liquidity into Ethereum’s dynamic financial ecosystem.
The concept of “wrapping” involves locking up real Bitcoin in a custodial wallet while issuing an equivalent amount of WBTC on Ethereum. When users want to redeem their BTC, the WBTC is burned (destroyed), and the original Bitcoin is released from custody.
The Origins of Wrapped Bitcoin
Wrapped Bitcoin was officially launched in January 2019 as a collaborative effort between BitGo, Kyber Network, and Ren — three prominent players in the early DeFi space.
- BitGo serves as the primary custodian responsible for holding the underlying Bitcoin reserves.
- Kyber Network and Ren act as merchants within the WBTC network, facilitating the minting and burning processes that ensure supply integrity.
- The project operates under a Decentralized Autonomous Organization (DAO) model, where member institutions govern updates and policy decisions collectively.
This multi-party governance structure was designed to enhance transparency and trust, although it still relies on centralized custodianship for security and operational efficiency.
How Does Wrapped Bitcoin Work?
At its core, WBTC functions through a process known as token wrapping, which converts non-native assets into compatible formats on other blockchains. Here's how it works:
- A user requests to convert BTC into WBTC via a supported merchant or DeFi platform.
- The merchant verifies the transaction and sends the BTC to BitGo’s secure custodial wallet.
- Once confirmed, BitGo signals the WBTC smart contract to mint an equal amount of WBTC on Ethereum.
- The newly minted WBTC is sent to the user’s Ethereum address and can now be used across DeFi platforms.
- To reverse the process, the user burns WBTC, triggering BitGo to release the equivalent BTC back to them.
This mechanism ensures that every WBTC token in circulation is fully backed by real Bitcoin, maintaining confidence in its value peg.
Ethereum’s higher transaction throughput compared to Bitcoin also means that WBTC transactions are generally faster and more efficient for use in time-sensitive financial operations like flash loans or arbitrage trading.
Key Use Cases of Wrapped Bitcoin
WBTC plays a vital role in expanding Bitcoin’s utility beyond simple peer-to-peer payments or store-of-value functions. Its primary applications include:
1. Accessing Decentralized Finance (DeFi)
Bitcoin holders can use WBTC to lend, borrow, stake, or earn interest on platforms like Aave, Compound, and Uniswap. Without WBTC, these opportunities would remain inaccessible to BTC-only investors.
2. Trading on Decentralized Exchanges
WBTC is widely used as a base trading pair on DEXs. For example, users can trade WBTC against stablecoins like DAI or USDC directly from their wallets without relying on centralized exchanges.
3. Yield Farming and Liquidity Provision
By supplying WBTC to liquidity pools, users earn rewards in the form of trading fees and additional tokens. This incentivizes participation in DeFi ecosystems while increasing capital efficiency.
4. Cross-Chain Asset Utilization
While WBTC originated on Ethereum, it has since expanded to other chains like Polygon, Avalanche, and Fantom through bridging protocols, enabling broader cross-chain functionality.
👉 Learn how WBTC powers yield generation across top DeFi platforms.
Frequently Asked Questions (FAQ)
What is the difference between Bitcoin and Wrapped Bitcoin?
Bitcoin (BTC) is the original cryptocurrency operating on its own blockchain. Wrapped Bitcoin (WBTC) is an ERC-20 token on Ethereum that represents BTC 1:1 but enables usage in DeFi apps, smart contracts, and faster transactions.
Is Wrapped Bitcoin safe?
WBTC is considered secure due to its transparent reserve audits and multi-signature governance model. However, because it relies on centralized custodians like BitGo, it introduces counterparty risk not present in native Bitcoin.
Can I convert WBTC back to BTC?
Yes. You can burn your WBTC through a merchant or DeFi interface, which triggers the release of an equivalent amount of BTC from the custodial wallet.
Why does WBTC have the same circulating and max supply?
Unlike inflationary tokens, WBTC is not mined. Its supply is fully backed by real Bitcoin deposits, so new tokens are only created when new BTC is locked. The current supply reflects all deposited BTC converted into WBTC.
Does WBTC lose its peg often?
WBTC maintains a strong 1:1 peg to BTC due to arbitrage mechanisms and redemption incentives. Minor deviations may occur during high volatility but are typically corrected quickly.
Where can I store WBTC safely?
You can store WBTC in any Ethereum-compatible wallet such as MetaMask, Trust Wallet, or Ledger hardware wallets. Always ensure you control your private keys for maximum security.
The Future of WBTC in the Evolving DeFi Landscape
As Ethereum continues to scale with upgrades like EIP-4844 and rollups, WBTC is poised to play an even greater role in cross-layer finance. Additionally, growing competition from alternative wrapped assets (like renBTC or sBTC) may push WBTC toward further decentralization efforts to maintain dominance.
With over $10 billion in total value locked (TVL) across various protocols at peak adoption, WBTC remains a cornerstone asset in DeFi. Its ability to merge Bitcoin’s trustless scarcity with Ethereum’s programmability makes it indispensable for serious crypto investors.
👉 Explore how WBTC integrates with next-gen DeFi protocols for enhanced returns.
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