The decentralized community of MakerDAO accepted Wrapped Bitcoin on its Ethereum-based DeFi protocol to generate DAI stablecoins.
MKR token holders announced on May 3 of adding Wrapped Bitcoin (WBTC) as a new collateral asset to its Maker decentralized finance (DeFi)protocol. WBTC is a fourth asset approved by MakerDAO governance and will be used in addition to ETH, BAT, and USDC to open maker vaults in order to generate DAI.
According to the official statement, wrapped Bitcoin (WBTC) will help bring greater liquidity to the Ethereum and decentralized finance (DeFi) ecosystems, and to decentralized exchanges.
First Bitcoin on Ethereum blockchain
Wrapped Bitcoin (WBTC) is the first ERC20 token backed 1:1 with Bitcoin. As it’s said on its website, WBTC is community-led, transparent, and verifiable.
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Furthermore, WBTC will act like an asset, that helps to bring Bitcoin to the Ethereum blockchain. According to the post, since the day of the announcement, it can be used to open a vault to generate DAI stablecoins.
The existence of WBTC brings more liquidity to the Ethereum ecosystem, including decentralized exchanges, wallets, and payment applications. Since WBTC standardizes Bitcoin to the ERC20 format, it becomes possible to use it for token trades.
Ethereum-based DeFi on the rise
As DailyCoin reported last month, the decentralized finance (DeFi) industry is growing rapidly. The total transaction volume across various blockchains has grown nearly $8 billion over the year. Furthermore, the major part of these transactions was generated by Ethereum protocol.
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Since Ethereum network is constantly growing, Ethereum-based DeFi projects are its main volume drivers with an increase of transaction volume up to 778% compared to the previous year. Meanwhile, most of the volume of Ethereum-based DeFi protocols were made in ERC20 tokens, such as USDC or DAI.
