6 months ago
Earlier this year, immoderate users of wrapped bitcoin wBTC were dismayed to find its issuer BitGo was sharing custody of their bitcoin (BTC) with BiT Global, a Hong Kong-based crypto custodian partially owned by TRON laminitis Justin Sun.
The occurrence "reopened aged wounds inflicted by erstwhile centralized custody failure," adjacent though it did not exposure immoderate caller flaws, the Bitcoin Builders Association (BBA) said successful a study connected Wednesday.
"These wounds origin BTC holders to beryllium unwilling to commercialized disconnected their self-custody for trusted solutions," the study said.
The BBA noted that there's been signs of increasing distrust toward centralized entities. WBTC's proviso has dwindled to 0.74% of the full bitcoin circulating proviso from 1.5% implicit 2 years ago.
The illness of galore crypto entities successful 2022 highlighted the risks of ceding custody of one's coins to centralized custodians, a acquisition that galore users are not consenting to larn the hard mode again.
WBTC Dominance
WBTC is an Ethereum-based token tradable 1:1 for BTC, allowing users to enactment their assets to enactment successful the decentralized concern (DeFi) satellite which is mostly unavailable successful the Bitcoin ecosystem.
The token is comfortably the marketplace person successful the tokenized BTC sector, accounting for a 60.4% share, according to the BBA. When added unneurotic with distant runner up BTCB (built connected BNB), the 2 tokens person a marketplace stock of 87.2%.
However, this consolidation could beryllium successful the process of being breached up fixed the uptick successful caller tokens emerging of late. Of the 21 antithetic participants successful this sector, 40% person launched successful 2024 oregon volition bash truthful successful the adjacent future, the BBA said.
The BBA listed each of these participants successful the study and addressed immoderate of the pros and cons of a prime few. For example, wBTC is the astir liquid token, is integrated crossed each the largest blockchains and has been stress-tested for implicit 5 years. However, the task with BiT Global is simply a interest for galore fixed the counterparty hazard it introduces, "especially considering the engagement of Justin Sun, known for arguable practices successful the crypto space," according to the report.
On different hand, a token similar Bitcoin layer-2 Stacks' sBTC has yet to beryllium accent tested (having gone unrecorded lone this week) and its caller programming connection Clarity tin marque DeFi integration much tricky. On the positive side, it is much decentralized than wBTC and inherits the extortion of the Bitcoin network's security.
The tokenized BTC marketplace represents a specified 1.23% of the full bitcoin marketplace cap, adjacent to astir $25 cardinal astatine the clip of writing.
"This highlights the immense untapped imaginable for solutions offering a programmable mentation of BTC," the BBA said.
Read More: Bitcoin Project BOB Maps Out How the Original Blockchain Could Take Over DeFi
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