Charted: WBTC supply has shrunk by 15%
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The main platform for minting derivatives of the original cryptocurrency is hemorrhaging assets.
Why it matters: Wrapped bitcoin (WBTC) has been crucial infrastructure for decentralized finance, allowing holders of bitcoin to borrow against it to trade and transact on other chains, among other things.
- How it works: A trader's bitcoin gets locked up in a wallet on its native blockchain, and a corresponding bitcoin gets printed on a different blockchain, all executed by a smart contract.
- When WBTC users withdraw, their token on the second blockchain gets burned and their original bitcoin is returned to them.
Catch up quick: In August, BitGo, a leading crypto custodian and creator of WBTC, moved the product into a joint venture with Bit Global, in which BitGo would remain a minority shareholder. Bit Global has a relationship to the Justin Sun/Tron universe of crypto companies.
- Justin Sun probably has the highest correlation between crypto success and controversy in the industry. (You may know him most recently for eating a banana featured in his newly bought $6.2 million artwork).
By the numbers: Around 24,000 net bitcoin have left the platform (that's counting deposits) since the product changed hands, or about $2.5 billion worth, at current prices.
- WBTC on Ethereum has contracted by 15% to 129,318.42 WBTC, as of this writing.
- By far the lion's share of WBTC is minted on Ethereum, the second-largest blockchain.
- Bit Global has not replied to requests for comment about the withdrawals.
State of play: Traders haven't stopped using bitcoin derivatives.
- Since the success of WBTC, other products have come along to scratch the same itch.
- And as the exit from WBTC began, some other products perked up, such as the decentralized TBTC.
The most notable new product, however, has been coinbase wrapped bitcoin (CBBTC). It launched shortly after WBTC changed hands.
- There have been 23,138 CBBTC minted since it launched, nearly the same number that's left WBTC.
Friction point: Coinbase, the largest crypto exchange in the U.S., delisted WBTC after the deal.
- Bit Global sued.
- And Coinbase made clear in court filings that it dropped WBTC because Justin Sun's involvement made it uneasy about the product.
💭 Our thought bubble: As the chart above indicates ☝️, Coinbase was not alone.
The latest: Coinbase filed a motion Tuesday to dismiss the suit.
