What other custodial BTC options are available besides WBTC?

Author: Wenser, Odaily Planet Daily

The controversy surrounding WBTC continues to spread.

On August 19, the well-known market maker Wintermute deposited 1,631.863 WBTC into Binance within 13 hours, valued at $97.03 million. Since the 17th, the cumulative transfer amount has grown to 5,860.67 WBTC, with a total value of up to $348 million. On August 15, MakerDAO passed the proposal to "reduce WBTC collateral scale," with subsequent actions including: reducing WBTC-A DC-IAM (maximum collateral amount) from $500 million to $0; reducing WBTC-B DC-IAM (maximum collateral amount) from $250 million to $0; reducing WBTC-C DC-IAM (maximum collateral amount) from $500 million to $0; disabling WBTC lending in SparkLend; and lowering WBTC LTV from 74% to 0%.

Faced with implicit risks, these institutions' actions are understandable. However, many have raised the question: After WBTC, what custodial BTC options are available for DeFi liquidity?

This article provides a brief introduction to other existing alternatives in the market.

FBTC

In April this year, a new Bitcoin asset and brand called FBTC, supported by the Ethereum L2 network Mantle, Mantle LSP, and digital asset financial service platform Antalpha Prime, announced plans to launch its full-chain Bitcoin asset.

FBTC is pegged 1:1 with Bitcoin and aims to adopt yield-enhancing strategies within the Bitcoin ecosystem to improve Bitcoin's utility and liquidity. During the initial launch phase in May, FBTC is expected to be deployed on chains such as Ethereum, Solana, Aptos, Sui, Merlin Chain, BNB Smart Chain, and Polygon POS. Subsequently, FBTC may integrate with wallets such as Binance Wallet, Bybit Wallet, Bitget Wallet, OKX Wallet, Particle Network, TokenPocket, and UniSat.

FBTC launch promotional material

According to information from the FBTC official website, FBTC will initiate Genesis Bonfire and yield strategy-related plans in the third quarter of 2024, and ecosystem construction and multi-chain expansion in the fourth quarter. It is worth mentioning that FBTC supports seamless interoperability to support various applications on both L1 and L2 networks.

swBTC

On August 14, the Ethereum staking project Swell (@swellnetworkio) announced the launch of the liquidity re-staking token "swBTC," allowing users to deposit WBTC to earn swBTC, with expected re-staking rewards to be distributed starting mid-September.

Subsequently, the platform announced that since the launch of swBTC this week, over $13 million WBTC has been deposited on the platform (currently about $13.6 million), with liquidity on Curve Finance reaching $3 million. Additionally, lending integration is on the way.

According to an official post from Swell, the security guarantees for swBTC mainly include:

• Based on the proven @yearnfi v3
• Risk monitoring provided by @gauntlet_xyz
• Vault strategy provided by @aerafinance
• Security audits conducted by @NethermindEth and @chain_security

swBTC exchange website

According to the official website, as of the time of writing, the locked amount of swBTC has reached $13.9615 million, approaching $14 million in less than a week, equivalent to 234 BTC.

yBTC

In July, @pStakeFinance officially stated that pSTAKE aims to leverage the expertise accumulated since entering the liquid staking field in early 2021 to address the "Babylon staking yield issue," specifically achieving automatic compounding Bitcoin yields through yBTC. pSTAKE will issue yBTC (yield-bearing BTC) on the Ethereum ecosystem, which is leading in DeFi and liquidity, in future versions. Subsequently, yBTC will also be integrated into EVM ecosystems and BTC L2 networks, providing additional accessibility and yields, thus achieving "reliable Bitcoin yields for everyone."

Recently, the mainnet staking activities for Babylon are about to commence, allowing users to deposit BTC into @pStakeFinance to mint yBTC, with the corresponding yields from native BTC deposits automatically compounding to yBTC holders as a Bitcoin derivative.

pSTAKE explanation of yBTC operation mode

Previously, according to official statements, after launching a semi-public v1 (BTC deposits only) testnet, 46,710 users deposited 54.69 testnet BTC, completing 73,546 on-chain transactions. For more updates on yBTC, refer to the official testnet website.

cbBTC

On August 14, Coinbase's official account announced that cbBTC is about to launch, but did not disclose further details. Community users speculate that the exchange is planning to launch its own wrapped Bitcoin token.

Earlier that day, Jesse Pollak, head of the Base protocol, also stated: "I want to say it loud: I love Bitcoin, and I am very grateful for its pioneering role in the cryptocurrency space. We will build a large-scale Bitcoin economy on Base."

Bitget Research Institute commented on this news, stating, "Coinbase may bring Bitcoin into the DeFi ecosystem through centralized + compliant custody, and the market generally anticipates the arrival of BTCfi."

Coinbase official tweet

tBTC

@tBTC_project allows users to create tBTC using BTC through a network of signers, who are randomly selected and choose different signer groups for each minted tBTC. Signers must provide ETH as collateral to ensure they cannot take the locked BTC. In practice, signers must over-collateralize their deposits with ETH worth 1.5 BTC. Signers willing to lock their ETH will earn fees paid upon redemption, thus receiving rewards.

According to the official website, the current total supply of tBTC is 3,344.7, approximately $195 million.

According to Dune data, the number of tBTC holders is 1,269, accounting for about 2.1% of the BTC share on Ethereum, with major contracts holding tBTC including Mezo, Wormhole, Curve, and others.

Others

It is worth noting that, according to Dune data, there are currently various custodial BTC options on the Ethereum chain, including renBTC, HBTC, imBTC, sBTC, etc. However, in terms of both quantity and capital scale, they pale in comparison to WBTC. Among them:

renBTC was neglected by the market after the FTX collapse in November 2022: MakerDAO canceled the use of renBTC as collateral and reduced its risk exposure viewed as a risk asset by the DAO. This asset was developed by RenProtocol, a project supported by AlamedaResearch, and is a wrapped Bitcoin asset like WBTC. Previously, a hacker exchanged 10,000 ETH for 685 renBTC and bridged it to the Bitcoin network. The last update from the official account was in January of this year.

HBTC had previously faced scrutiny from Theblock due to transparency issues, and the latest news from its official X platform account was a response to the concerns in 2022. However, its official website appears to have not been updated for a long time, possibly indicating that the project has gradually been abandoned after Huobi changed ownership.

sBTC is one of the synthetic assets created by the Synthetix protocol. Generally, synthetic assets track the value of different assets, such as the S&P 500 index, TESLA stock, oil prices, or Bitcoin. In Synthetix, all synthetic assets are collateralized in the form of SNX tokens, and the protocol is over-collateralized mainly to absorb the drastic price changes of synthetic assets. According to Dune data, the ETHBTC trading volume for Synthetix V2 on August 14 was around $280,000.

In addition, in March of this year, the Bifrost Foundation announced a partnership with Stacks, with the Stacks network expected to upgrade this year to enable non-custodial assets sBTC pegged 1:1 with Bitcoin. sBTC will serve as collateral for BTCFi services and support the use of BtcUSD (BtcUSD is an over-collateralized stablecoin that Bifrost plans to launch for its native Bitcoin staking service BTCFi) in the Stacks ecosystem.

Dune data information interface

Conclusion: Different xBTC, Different Functions

If the role of WBTC is to bring BTC liquidity into the Ethereum ecosystem, then various types of xBTC are more like assets that meet different needs in different scenarios (such as yield generation, collateralization, etc.).

Now that the legitimacy and transparency of WBTC are being questioned, various decentralized or centralized custodial BTC assets may welcome a new wave of "overflow liquidity," potentially coming from WBTC or from native BTC assets.