MakerDAO approves hosting Bitcoin-like token on the Ethereum blockchain

MakerDAO protocol will now offer transactions between BTC and ETH using a wrapped Bitcoin (an ERC20 token).
Wrapped Bitcoin (wBTC) is the fourth digital asset in the MakerDAO Defi ecosystem after ETH, USDT and BAT.

Rajarshi Mitra Independent Analyst

MakerDAO governance has voted to host Bitcoin on the Ethereum blockchain through the use of Wrapped Bitcoin (wBTC) as a fresh collateral asset in the Maker Protocol. wBTC is an ERC20 token pegged to Bitcoin at a 1:1 ratio. It is the fourth digital asset to be included in the MakerDAO DeFi ecosystem after ETH, USDT and BAT. wBTC will now be able to open Maker Vaults to generate Dai. The report reads:

wBTC will help bring greater liquidity to the Ethereum and decentralized finance (DeFi) ecosystems, and to decentralized exchanges (DEXs).

Through wBTC, Bitcoin holders can use their BTC holdings to open a vault and create Dai. Oasis Borrow, a decentralized finance platform, will handle the duties of vault management. The conversion process involves five steps. This includes CoinList registration, fulfilling the KYC requirements, wrap BTC to wBTC, remit wBTC to a synchronized wallet and establishing a wBTC vault to create fresh DAI.

More than one billion US dollars’ worth assets are held in DeFi protocols. Crypto experts were skeptical about early Bitcoin adoption within Defi covenants but were also curious to learn how the future would unfold.

Author

Rajarshi Mitra

Independent Analyst

Rajarshi entered the blockchain space in 2016. He is a blockchain researcher who has worked for Blockgeeks and has done research work for several ICOs. He gets regularly invited to give talks on the blockchain technology and cryptocurrencies.

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