Odaily Frontline | How does the Ethereum economy consume Bitcoin?

This article comes fromBeInCrypto, original author: Martin Young

Odaily Translator |

This article comes from

, original author: Martin Young

Odaily Translator |

The DeFi market appears to have bounced back quickly from March's "Black Thursday." According to DeFi Pulse, the total value locked is back at an all-time high of $1.7 billion. The FOMO sentiment that started a few weeks ago has driven investors and speculators to flock to DeFi protocols to deposit their crypto collateral.

There is a reason for this phenomenon. Traditional crypto storage points such as wallets or exchanges do not offer any returns, while DeFi platforms can offer substantial interest rates: around 4-6% for stablecoins and over 15% for the various supported altcoins.

Add to that the ability to earn tokens including COMP or BAL, which explains why more than $750 million has poured into the DeFi market in the past month. Beyond that there are some interesting developments like the rise of tokenized Bitcoin on the Ethereum network that are constantly changing and driving the DeFi landscape.

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Bitcoin flows into DeFiDefiant newsletterOver the past month, the DeFi boom has not only attracted Ethereum to the ecosystem, but the amount of Bitcoin locked in various protocols has also soared. The total value of BTC locked in DeFi has doubled in the past two weeks.

The number of locked bitcoins is currently close to 10,000, an increase of 575% from the beginning of the year. In contrast, the number of ETH locked in DeFi has returned to 3 million, which is the same as the data in early 2020.

Industry expert Camila Russo in the latest

An in-depth study of the growing connection between Bitcoin and ERC-20 tokens. With more than $100 million in Bitcoin circulating on the Ethereum network, the two assets have never been more closely linked. While there’s still a lot of tribalism in the crypto world, Russo draws this metaphor: “Ethereum became a gravity well for global financial assets. Bitcoin was the first victim.”

Odaily Note: A gravity well or gravitational well is a conceptual model of a gravitational field surrounding a certain celestial body in space. It’s like putting an iron ball on a supporting cloth, and the cloth around the iron ball will sag downwards. Similarly, a large-mass celestial body can also cause a similar sag in the surrounding space, and the surrounding small celestial bodies will sink into the sag. , gravity may be produced in this way.The explosive growth of DeFi platforms that provide financial incentives for providing encrypted liquidity has successfully attracted Bitcoin holders. It’s no longer enough to just hold Bitcoin, savvy investors are finding new avenues to profit — taking advantage of DeFi’s ever-increasing profit opportunities for further gains by transferring their Bitcoin to Ethereum.There are other tokenized versions of Bitcoin, such as renBTC, which was launched on the Ethereum network at the end of May this year. The token operates through a RenVM protocol using a general-purpose, decentralized, trustless, permissionless custodian. This project took place on Medium

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: "Once you hand over your BTC to RenVM, it will mint it into an ERC-20 token (ie renBTC) at a 1:1 ratio to ensure your renBTC is always backed by the same amount of BTC."secondary titleEthereum Gravity Well

Dubbed the “Ethereum Gravity Well,” the trend has seen Compound Finance attract the most Bitcoin in recent weeks. This is largely due to

Starts June 15

Driven by the distribution of COMP tokens. Within two days, COMP became the first DeFi "unicorn" with a market capitalization exceeding $1 billion.According to data from DeFi Pulse, Bitcoin began entering the Compound protocol on June 18, when only a paltry 173 BTC were locked. Today, this number has reached 2578, an increase of nearly 1400%.Speaking of which, the initial catalyst for “Bitcoin on Ethereum” was MakerDAO, which added wBTC as collateral in May of this year. The Defiant added that as wBTC reached the debt ceiling of 10 million DAI in circulation, the amount of wBTC locked in Maker stopped growing.

Balancer provides yet another boost to Bitcoin collateral in the DeFi ecosystem:

Another Token Distribution Mechanism

More liquidity “farming” options are created, attracting more crypto collateral, driving the total value locked on the platform up.

DeFi Pulse data shows that the number of bitcoins locked in Balancer has surged from 25 in early June to 1,657 today.

A chart provided by Mythos Capital founder Lucas Campbell lays out the amount of Bitcoin tokenized in various forms on the Ethereum network:As the chart above shows, some tokenized bitcoins are clearly more popular than others. Among them, wBTC accounts for 78% of all BTCs on Ethereum and occupies a dominant position; others include renBTC, hBTC, imBTC, etc.The Defiant’s research concluded that a common theme of this trend is liquidity farming: “People can’t resist using their otherwise idle BTC for high returns — typically between 30% and 100% APY.” .”

The potential of BTC in DeFi is huge, we've only scratched the surface. In the past month, the number of bitcoins on Ethereum has surged, and if DeFi continues to maintain this growth momentum, the number of bitcoins is likely to increase, and this