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Author: Admin | 2025-04-28
Since decentralized finance (DeFi) first exploded in 2020, the majority of DeFi projects have been built on the Ethereum blockchain.Bitcoin holders who want to access DeFi have often chosen to use wrapped versions of Bitcoin such as WBTC. This has allowed them to use tokens pegged 1:1 to Bitcoin.But in 2021 and 2022, there have been big changes in the world of DeFi. Not only have potential “Ethereum killers” such as Solana taken DeFi market share away from Ethereum, there has been increasing growth and viability to DeFi projects built around the Bitcoin blockchain itself.What is DeFi?DeFi products are tools built predominantly on Ethereum that aim to revolutionize and replace the current methods of borrowing, lending, and banking. DeFi has also given rise to relatively new concepts such as yield farming.The aim of DeFi is to make the world of finance available to all—or, at least, to anyone with an internet connection.What does Bitcoin have to do with DeFi?The majority of DeFi platforms are still built on smart contract platforms such as Ethereum. But there are a lot of people who own Bitcoin who want to get involved too. This has led to a range of solutions being created to help Bitcoin holders invest in DeFi.Bitcoin is the biggest cryptocurrency by market cap, so there’s unsurprisingly a demand for solutions among Bitcoin holders.How does Bitcoin DeFi work?Bitcoin DeFi works in different ways depending on the blockchain where it's deployed.Bitcoin DeFi built on Ethereum:To use Bitcoin on Ethereum, Bitcoin holders need to use a token such as Wrapped Bitcoin (WBTC). Wrapped Bitcoin is essentially a 1:1 representation of Bitcoin that can be used on other blockchains. On Ethereum, the Wrapped Bitcoin (WBTC) ERC-20 token can be used on DeFi platforms just like any other asset on the Ethereum blockchain.2) Wrapped Bitcoin (WBTC) is the first ERC20 token backed 1:1 to Bitcoin. It’s aiming to bring the representative and new use-cases of Bitcoin into Ethereum blockchain. pic.twitter.com/NtaKbZvsdm— WBTC (@WrappedBTC) May 23, 2019A Bitcoin holder could convert Bitcoin to WBTC, and then borrow against WBTC to borrow stablecoins using a platform such as
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