On September 3, 21.co, the parent company of 21Shares, announced the launch of its Wrapped Bitcoin product, 21BTC, on the Ethereum blockchain.
About 21BTC
This new product aims to enhance the decentralized finance (DeFi) ecosystem by allowing users to leverage Bitcoin’s liquidity within the Ethereum network. 21.co partnered with Flow Traders, a leading global market maker, to ensure the product’s security and reliability. The company emphasized that 21BTC distinguishes itself from other wrapped Bitcoin products by securely storing the underlying assets in cold storage, thereby eliminating the need for a bridge.
Comparison with Other Wrapped Bitcoin
Wrapped Bitcoin tokens, including 21BTC, are ERC-20 tokens that are backed one-to-one by Bitcoin (BTC) and issued on various blockchains. These tokens enable Bitcoin holders to interact with Ethereum-based DeFi applications without needing to acquire Ethereum or other Ethereum-based tokens. To redeem the tokens, users can burn them in exchange for native BTC, while minting involves depositing native Bitcoin to receive the tokens. The launch of 21BTC by 21Shares comes at a time when Wrapped Bitcoin (WBTC), the most popular Bitcoin wrapper, is facing challenges. WBTC has been under increased scrutiny following BitGo’s announcement of plans to transfer control of WBTC to a joint venture with crypto custody platform BiT Global and TRON founder Justin Sun.
Market and Competition
In response to these developments, the lending protocol Sky (formerly MakerDAO) voted to stop new users from borrowing against WBTC, leading to a decline in demand for the asset. Data from Dune Analytics shows that WBTC’s supply decreased by over 1,000 tokens last month, marking the third-highest monthly negative change this year. Amid these challenges, competitors like Coinbase are seeking to challenge BitGo’s market dominance. Additionally, the DeFi protocol Threshold has proposed merging its BTC-wrapped token, tBTC, with WBTC in an effort to stabilize the more popular BTC product.
As demand for Bitcoin on other blockchains remains strong, well-established firms like 21.co are eager to capitalize on the market. The introduction of 21BTC reflects the growing interest in wrapped Bitcoin products and their potential to drive the broader adoption of DeFi.
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