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Wrapped Bitcoin ‘Burns’ Outpaced Minting for the First Time in December
BitGo “unwrapped” over 11,600 WBTC last month.
By Zack Voell
Updated Mar 6, 2023, 3:41 p.m. Published Jan 9, 2021, 6:40 p.m.
Traders are swapping their tokenized bitcoins for the real thing more than ever.
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- BitGo saw a record 11,613 wrapped bitcoin (WBTC) swapped for real bitcoin in December, with only 2,731 BTC exchanged for the bitcoin-backed ERC-20 tokens last month.
- December marked the first time in the young project’s history that “burns,” the reversion of WBTC back to BTC, have outnumbered “mints.”
- The total value of the “burned” WBTC is approximately $235 million, based on bitcoin’s price at the time the tokens were swapped for BTC.
- Diminishing yields in decentralized finance (DeFi), a primary use case for WBTC, and increased trading activity on traditional cryptocurrency exchanges amid bitcoin’s recent eye-popping surge are likely reasons for the increase in burns and slowed rate of minting.
- Most of the burns came from trading firms Alameda Research and Three Arrows Capital.
- BitGo’s Wrapped Bitcoin project gained wide popularity through Q3 and early Q4 2020 amid a DeFi frenzy that saw over 124,000 BTC tokenized on Ethereum at its peak after starting the year with less than 600 BTC.
- In mid August, demand for WBTC was so high that bitcoins were being tokenized faster than they were being mined.
- To date, roughly 110,000 WBTC are still circulating in the DeFi ecosystem.
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