Will the negative news for WBTC be a positive for tBTC?
WBTC has a "crazy moat," and its profit margins are very low. Therefore, WBTC is unlikely to disappear anytime soon.Author: crv.mktcap.eth
Compiled by: Alex Liu, Foresight News
Is the bad news for WBTC a good thing for tBTC?
Thought you could relax and touch grass over the weekend? Unfortunately, new FUD has emerged!
Last week, BitGo announced that it would relinquish control of WBTC, raising concerns about the health of the WBTC project over the weekend. (In the announcement, BitGo stated that this action is part of a strategic partnership with Justin Sun and the Tron ecosystem.)
BitGo Announcement
Why are some people worried about Justin Sun having more strategic power over WBTC?
The early players in DeFi may remember that Justin Sun previously launched the wrapped Bitcoin token HBTC, which ended poorly—its current trading price is closer to USDT than BTC.
HBTC Price on CoinMarketCap
Will this situation be different?
Justin Sun quickly clarified his exact role in the ecosystem:
Statement related to Justin Sun
Nevertheless, DeFi users have initiated a serious discussion about the role of WBTC in the ecosystem.
WBTC has been criticized for its relative centralization, and they attempt to prove their reliability with the rhetoric, "BitGo's balance sheet is strong, and if this is indeed a problem, we are happy to prove it to the appropriate lawyers." In contrast to this rhetoric, tBTC has on-chain reserve proof.
WBTC remains the largest wrapped BTC token, surpassing all its competitors. In the last cycle, other BTC wrapped tokens that had dual currency trading pairs with WBTC on Curve Finance included: Ren Protocol's renBTC and Synthetix's sBTC, but both no longer exist.
What other alternatives does WBTC have? It's currently hard to say there is a perfect solution.
An attractive option is frxBTC, which is rumored to be launching "soon." But Degen's want it "now," not "soon."
Frax founder states "frxBTC will be available soon"
In reality, the most viable alternative to WBTC at present is tBTC from TheT Network (Threshold Network), which, besides being more decentralized, has also demonstrated reliable long-term large-scale operations:
· v1: 4 years
· v2: 1.5 years
After BitGo announced its latest decision, Maker DAO had intense discussions about closing all WBTC debt, which constitutes about 10% of DAI's collateral; abandoning WBTC requires a strong alternative. Unsurprisingly, tBTC entered the discussion:
tBTC has good DeFi adoption rates. It has a significant number of use cases on Curve Finance. Besides being actively traded in major stable and volatile pools, tBTC can also mint crvUSD stablecoin.
Some traders have already started the conversion; are crvUSD whales participating in this WBTC/tBTC debate?
Whale users participating in DeFi using tBTC
Could this storm lead to a price reversal for tBTC/WBTC?
After the news from BitGo spread, the hourly chart showed some price fluctuations.
However, we expect this shift will not happen quickly.
Over the past week, the market capitalization of both wrapped BTC tokens has remained relatively stable. Even amidst the debate, neither token has seen significant inflows or outflows.
And the market capitalization of the two is vastly different:
· WBTC: 155,000 BTC
· tBTC: 3,000 BTC
WBTC indeed has a "crazy moat"! And its profit margins are very low. The $9 billion worth of BTC only generates $12 million in fees. Therefore, WBTC is unlikely to disappear anytime soon.
The liquidity and integration that wrapped tokens have accumulated over so many cycles will not be easily replaced, especially when the tokens are functioning normally and maintaining their peg.
Nevertheless, if you want to promote a more decentralized future, consider minting tBTC when you wish to transition from BTC to ETH. You can exchange wBTC for tBTC and redeem it back to native BTC for safekeeping (or continue using tBTC as DeFi collateral).
tBTC has good liquidity on-chain
