In a weblog post of Friday, Binance re-introduced BTCB to the world — a wrapped Bitcoin asset meant to deliver liquidity from the world’s largest cryptocurrency, BTC, to Binance Sensible Chain’s DeFi (decentralized finance) ecosystem. 

Nonetheless, hodlers could also be cheering the renewed curiosity in BTCB for a unique cause: every Bitcoin locked on BSC might contribute to a looming BTC provide disaster.

First introduced final yr, Binance initially noticed wrapped Bitcoin solely as a car for merchants to acquire cross-chain asset publicity with out leaving BSC. Since then, nonetheless, the utility of wrapped Bitcoin has boomed because of the precocious maturation of the DeFi ecosystem.

For example, WBTC — a wrapped Bitcoin token on Ethereum — has loved large success since its January 2019 launch: it at the moment ranks because the #14 cryptocurrency by marketcap, and has discovered vital adoption in protocols akin to Aave and Uniswap, whose contracts each rank among the many top-10 holders of WBTC. 

Of their weblog, Binance famous that comparable adoption could also be potential for BTCB. The wrapped Bitcoin might be used to mint stablecoins with BSC-native protocols akin to QIAN and Venus; as collateral for lending protocols akin to CREAM; and in yield farming and liquidity mining protocols akin to Beefy, Bakery, and Pancake. 

Based on what Binance calls a “Proof of Belongings” page, there are at the moment over 9,600 Bitcoin on BSC — over $181 million value. Nonetheless, the weblog put up specifies that solely 2,000 are circulating. 

Different sensible contract-enabled chains intend to compound the rising shortage. Solana’s cross-chain Wormhole venture will flip ERC-20 tokens into SPL tokens, together with WBTC, and likewise, Interlay is utilizing assist from a Web3 Basis grant to build a trustless bridge bringing wrapped Bitcoin to Polkadot. Interlay will launch in early 2021.

Significantly if the success of wrapped and cross-chain Bitcoin property proceed to develop, establishments trying to hoover the BTC provide might be confronted with mounting shortage. Aaron Wright, the co-founder of OpenLaw, pointed to such a potential future in a Tweet: