What is wrapped bitcoin?
WBTC — renBTC | What are their differences?
Did you know that “pure” BTC only exists on the Bitcoin blockchain?
Yeah, that token that you exchange in 1inch is not the real BTC, but don’t be scared.
It is as valuable as the real one…
There are many ways to have a version of BTC on other blockchains (including the seven chains that Beefy Finance supports: Arbitrum, Harmony, Binance Smart Chain, Polygon, Fantom, Avalanche and HECO).
We are going to explain two of those techniques in this article. WBTC, and renBTC.
WBTC
The first is WBTC (or wrapped BTC).
WBTC is an erc-20 token backed 1:1 by BTC.
In order to mint WBTC, an authorized merchant needs to send BTC to the BTC custodian, and after he receives the BTC, the custodian mints WBTC in exchange.
The same process can be reverted burning 1 WBTC to receive 1 BTC in exchange. This process is only available to a selected group of Merchants.
There is a different approach to this, since the custodian holding all the BTC is not much… decentralized… Here comes renBTC.
renBTC
renBTC is a decentralized approach to having BTC on other blockchains.
It’s a protocol that decentralizes custody and makes the process of minting and burning available to everyone (not only selected merchants).
Why do we need wrapped BTC?
Both WBTC and renBTC allow BTC holders to access DeFi products, like borrowing stablecoins against their BTC.
WBTC and renBTC are the most popular tokenized versions of BTC respectively.
You can earn high APY on your BTC by wrapping it with one of these methods and entering one of the vaults on Beefy Finance.
And what about the price you might ask? Given that both can be redeemed for real BTC.
They have both been following the BTC chart, like a mirror.
Now that you know them both, fancy some good APY on BTC with near-zero impermanent loss? Go to Beefy Finance (Arbitrum)
