In a significant development, the supply of Wrapped Bitcoin (wBTC) has dropped to a negative value after a significant burn of 11,500 wBTC. The burn was linked to Celsius, a decentralized finance platform offering cryptocurrency lending and borrowing services.
The burn was executed by Celsius as part of its ongoing efforts to reduce the supply of wBTC and increase its scarcity. A total of 11,500 wBTC tokens were destroyed, which the team sent to an address with no private key, effectively removing them from circulation.
In the meantime, the total supply of wBTC stands at over 164,000, with a monthly growth rate of around -7.39%.
Wrapped Bitcoin Supply Turns Negative
Following the burn, the supply of wBTC has dropped to a negative value, meaning fewer wBTC coins are left to investors and the broader community. This move aims at pushing the token’s price up, as demand tends to increase due to high scarcity.
This burn is a positive development for the cryptocurrency ecosystem as a whole. The reduced supply of wBTC will make it more valuable and increase its appeal to investors and traders who seek a scarce asset with a strong use case.
If this move turns out positive, the team may continue burning the wBTC tokens in the coming months. This will be part of its efforts to increase the scarcity of the token and support the long-term value of its users’ investments.
The platform has also stated that it will work with other decentralized finance platforms to encourage them to join the effort to reduce the supply of wBTC and increase its value.
Primarily, the wBTC burn will likely have a lasting impact on the value and appeal of the token. However, it remains to be seen how other decentralized finance platforms will respond to the burn and whether they will join the effort to reduce the Wrapped Bitcoin supply.
wBTC As An ERC-20 Token
Wrapped Bitcoin is an example of an ERC-20 (Ethereum) token but aims to mirror the value and price of BTC. The token surfaced in 2018 by major developers, including Bitgo, Ren (a blockchain interoperability protocol), and Kyber, a multichain liquidity platform. The decentralized autonomous organization (wBTC DAO), with about 30 members, commits to managing and overseeing transactions with the token.
Exchanging BTC for Wrapped Bitcoin typically begins with a burn transaction and notifying custodians, as per merchants. The merchants identify a locked BTC blockchain custodian address and transfer real tokens. After the real Bitcoin reaches the address, it mints the token, bringing it to the same level as the wBTC on the Ethereum network.
As an Ethereum-based token, wBTC’s transactions are typically faster. But that’s not all its advantage. wBTC is integrated into Ethereum wallets, allowing for interaction with smart contracts and decentralized applications.
Featured image from Pixabay and chart from Tradingview.com