After over a year of existence, the market capitalization of (Ethereum-)Wrapped Bitcoin (WBTC) has seen a steady rise since roughly March. Starting on about May 10, the USD value of bitcoins wrapped in WBTC smart contracts surged from about $10 million to over $35 million at the time of writing.
This change in the WBTC chart represents a parabolic explosion of use, whereas the system had before rarely held more than $5 million worth of value on its network.
One explanation for this rise since March is of course the rise in general asset prices of cryptos like Bitcoin and Ethereum.
Another, more dynamic explanation for the surge, especially in May, is the recent addition of WBTC to the MakerDAO ecosystem. As covered by CryptoGlobe on May 4, Maker holders recently voted to allow WBTC as a form of collateral for minting DAI, a decentralized stablecoin.
DAI is created when another Ethereum-supported digital asset is locked in a smart contract against it. The underlying asset can eventually be released, and both the formation and dissolution of the locked smart contract is performed by paying a fee in MKR, MakerDAO’s native token (which also gives voting rights on the system). In addition to Ethereum (ETH) itself, Basic Attention Token (BAT) and USDC can also be used to mint DAI.
A complex system of balances is designed to keep DAI equal to one US dollar—although, since there is no central authority controlling supply, the peg is not always perfectly 1:1.
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