While WBTC has been around for awhile its adoption and usage so far has been somewhat limited. However, with Compound Finances addition of WBTC to its platform, I can now officially say Bitcoin has joined DeFi.
Users from around the world can now borrow and lend Bitcoin trustless-ly and instantly online with just an Ethereum wallet, and a little know how.
✔ No sign ups
✔ No KYC*
✔ No permission.
In short, WBTC is just an IOU for a Bitcoin from reputable custodians. Some view this as very anti-crypto and hypocritical as it brings trust back into finance. But, that hasnt stopped thousands if not millions of users from storing their coins on centralized exchanges which, essentially, offer them IOUs as well.
At least with WBTC as an ERC20 token IOU, the underlying value can be moved around and enabled to participate in the very exciting DeFi space dominated by Ethereum.
DeFi is an abbreviation for Decentralized Finance industry. Rapidly expanding as the next Ethereum Killer App. The origin of this movement comes from MakerDAOs revolutionary USD based stablecoin DAI and the mechanism behind it.
DAI is effectively $1.5 worth of ETH wrapped in a smart contract that is traded and acts like $1. With a decentralized stablecoin, DEXs (Decentralized Exchanges) finally have the tool they were missing compared to centralized exchanges.
Building on the idea of a trustless decentralized stablecoin a cambrian explosion of financial services and tools has happened in the ETH space.
✔ Trustless loans
✔ Savings accounts
✔ Margin lending
✔ Algorithmic tokens
and more have begun re-inventing the financial world within the ETH platform.
✘ Savings accounts
✘ Central banking
✘ Lending
✘ Trading..
and what seems like almost every other financial activity is not possible on Ethereum.
While DeFi has experienced explosive growth over the last couple years and has lots of promise on its own, the addition of Bitcoin and the Bitcoin ecosystem is an exciting addition that could expand the ETH dominated industry further into the cryptoverse and beyond.
It will be exciting to watch and see how the addition of Bitcoin effects and or grows Defi. I can safely say regardless of WBTCs success, DeFi is just getting started and with or without Bitcoin it will succeed. Bitcoin could just make it better and faster.
