Odaily Frontline | In just two weeks, the Bitcoin-anchored currency has shrunk by $120 million

This article comes fromDecrypt, original author: Robert Stevens

Odaily Translator |

Summary:

This article comes from

, original author: Robert Stevens

Odaily Translator |

secondary title

Summary:

- From June to October, the amount of Bitcoin locked in Ethereum skyrocketed from negligible to $2 billion.

- Now, however, that number is starting to drop.

- The rising price of Bitcoin may have something to do with it, and DeFi incentives are drying up.

The amount of bitcoin locked on ethereum is falling as traders are withdrawing their bitcoin from ethereum-based DeFi smart contracts and selling it on the open market.

In the past 12 days, the number of Bitcoin-pegged coins on Ethereum has dropped from 153,591 on November 20 to 147,350 today, a decrease of 6,421, or about $120 million — just as Bitcoin began Rising market, surpassing the occasion of the previous record high.

Bitcoin enters Ethereum through synthesis. You buy a bitcoin, import it into a DeFi smart contract, and an Ethereum token representing bitcoin is generated.

In July, as the Ethereum-based DeFi boom was in full swing, the number of bitcoins anchored on the network increased significantly; traders could reap handsome returns by investing in lending protocols and decentralized exchanges.

This is attractive to Bitcoin HODLers who want to take advantage of idle crypto assets. This phenomenon known as "wrapped Bitcoin" started to catch on.

But then, in the last month, the amount of bitcoin locked on ethereum began to drop. Take the leading wBTC (Wrapped Bitcoin) as an example, its market share is about 80%: as of June 1, there are 4,000 wBTC, or about 38 million US dollars. That number peaked at 124,260, or $1.9 billion, on Nov. 9. Since then, the wBTC count has dropped to 119,893. While the value of wBTC rose to $2.3 billion, the number dropped by 4,367.

Two things may have contributed to this decline."

First, the bitcoin price shot up like a rocket. Bitcoin rose from about $10,500 in early October to nearly $20,000 this week. Bitcoin HODLers who invested in DeFi smart contracts while waiting for BTC's big breakout may have sold Bitcoin on the open market.

Second, DeFi rewards have dried up for months. Artur Schaback, co-founder and chief process officer (CPO) of Paxful explained: "In September, most of the liquid BTC has entered the Ethereum blockchain for yield farming, and in October is already participating in the yield farming party. It’s the latecomers who are still happy with the lower returns.”