Featured: Watkins explores the growth of Bitcoin on Ethereum and emerging decentralized alternatives to BitGo's wBTC: RenVM and Kepp Network
- DeFi's marketcap crosses $10B + our new Web3 sector page on OnChainFX
- ETH is up 8%, inching towards $500
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Bitcoin's DeFi Bridge
As yield bearing opportunities within Ethereum’s DeFi universe expands, the demand to port value from the outside will only increase.
We’ve already seen stablecoins migrate to Ethereum en masse, making fiat value interoperable with ETH based applications. Now, drawn by the allure of Ethereum’s booming DeFi ecosystem, we’re beginning to see a similar trend play out with Bitcoin.
In 2020, Bitcoin holders have ported more than half a billion dollars worth of Bitcoin onto Ethereum. How does it get there? It takes the bridge.
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To date, BitGo has been the undisputed leader in bridging Bitcoin to Ethereum through its wBTC token. Users simply send BTC to BitGo who custodies it on their behalf and mints corresponding BTC pegged ERC-20 tokens on Ethereum. These BTC-pegged tokens can then be used in various DeFi protocols. Currently, about $440 million in wBTC has been minted on Ethereum.
In contrast to BitGo’s centralized solution, two decentralized challengers have emerged in the form of RenVM and Keep Network. Instead of trusting a centralized custodian like BitGo, users of RenVM and Keep entrust their BTC to a decentralized custodian network.
Keep Network launched in May but had to pause user deposits after a vulnerability was discovered in its code a few days after launch. RenVM on the other hand has facilitated more than $380 million in volume between chains and currently custodies more than $130 million in assets (almost entirely in bitcoin).
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This behavior is indicative of what is likely to be the primary use case for interoperability for the foreseeable future. Given that Ethereum is the center of the decentralized financial universe, interoperability in the near term will serve to port different assets to and from Ethereum.
With only 0.3% of all bitcoin on Ethereum, the opportunity for decentralized bridges between the two chains is hard to miss. To learn more about the two approaches being taken by Keep and RenVM, read the full article.
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DeFi Sector hits $10B
Following the recent torrid rise of YFI and UMA, the aggregate market cap of the DeFi sector has crossed $10B. But have we *earned* it?
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Reminder that you can use onchainfx.com to keep track various sectors within the crypto markets, including:
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OnChainFX Market Snapshot (10:30am ET)
More at onchainfx.com
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Messari DeFi Roundup
Research to get you up to speed with the rapidly changing world of DeFi
YFI and The Industrialization of Yield Farming - The birth and rise of yearn.finance, with an analysis on YFI's long term outlook from Watkins. Full analysis
What the Fork is Going On? A breakdown of the raw fish inspired Uniswap fork - SushiSwap - and why it stands out from some of the other emoji coins. Full analysis
Value Capture in the Age of DeFi Aggregation - A look at the growing role that aggregators like YFI serve within the DeFi economy. Full analysis
How Melon's Token Economic Overhaul Impacts its Future Earnings - Melon's native MLN token is up 1,600% YTD with changes coming to its token economics. Jack reviews. Full analysis
Investing Like a Crypto Venture Capitalist – Mason looks at the evolving VC narrative that's developing around the "ownership economy," complete with Messari screeners tracking crypto VC portfolios. Full analysis
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Disclosure: Authors may own cryptoassets named in this newsletter. For more information, please visit messari.io.
Unqualified Opinions, a Messari newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.
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