In the world of cryptocurrency, the DeFi (decentralized finance) carnival is like a heat wave, sweeping in and stirring up the market. In this craze, Bitcoin-pegged coins play a vital role and become a new source of vitality in the digital currency market. Let us unveil the mystery of Bitcoin-pegged coins under the DeFi craze and explore the mysteries and vitality in it.

In today's digital currency market, DeFi has become a hot topic, and its decentralized characteristics have brought subversive challenges to the traditional financial system. DeFi projects have sprung up like mushrooms after rain, and various innovative financial products and tools are constantly being introduced, attracting more and more funds and attention. In this vibrant ecosystem, the figure of Bitcoin-pegged coins has become increasingly prominent, injecting new vitality and vitality into the entire digital currency world.

Bitcoin-pegged coins, as the name suggests, are crypto assets anchored to Bitcoin as the underlying asset. Their issuance is intended to solve the volatility problem in the digital currency market and provide investors with more stable and predictable investment options. By binding the value of Bitcoin to other assets, Bitcoin-pegged coins have maintained the characteristics of Bitcoin to a certain extent, while also having a wider range of application scenarios and more financial functions. This innovative design makes Bitcoin-pegged coins one of the most sought-after assets in the digital currency market.

Bitcoin-pegged coins, represented by USDT (Tether), have become one of the most popular stablecoins in the digital currency market. Its market value and circulation are both at the forefront, providing market participants with a fast, convenient and low-cost way to transfer value. At the same time, the stability and liquidity of USDT also provide important support for investors to seek hedging during market fluctuations, becoming an indispensable part of the investment portfolio. The activity and influence of this Bitcoin-pegged coin have also injected new vitality and momentum into the entire digital currency market.

In addition to USDT, there are many other Bitcoin-pegged coins emerging in the market, such as USDC (centralized USD coin), BUSD (Binance USD coin), etc. They each have unique characteristics and advantages, providing more options for the diversification of the digital currency market. The continuous emergence and development of these Bitcoin-pegged coins have further enriched the ecosystem of the digital currency market, providing investors with broader investment opportunities and more flexible asset allocation methods.

Driven by the DeFi craze, Bitcoin-pegged coins have also begun to be integrated into various innovative financial products and services. With the help of smart contracts and blockchain technology, Bitcoin-pegged coins can participate in various DeFi projects such as liquidity mining, lending agreements, and synthetic assets, providing users with more diversified and efficient financial services. This integration has given Bitcoin-pegged coins new functions and meanings, making their position in the digital currency market more stable and important.

In general, Bitcoin-pegged coins under the DeFi craze have shown strong vitality and potential, becoming an indispensable part of the digital currency market. Its stability, liquidity and innovation have injected new vitality and momentum into the entire market, providing investors with more choices and broader development space. With the continuous development and improvement of the digital currency market, Bitcoin-pegged coins will continue to play an important role, lead the direction of market development, and inject more vitality and vitality into the entire industry. Let us wait and see, and witness the brilliant development and unlimited possibilities of Bitcoin-pegged coins in the digital currency world together!

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

DeFi is undoubtedly the hottest sector in the cryptocurrency field in the past two months. The DeFi craze has not only attracted Ethereum to join this ecosystem, but the total issuance of BTC-pegged coins based on Ethereum has also continued to hit record highs.

DeBank data shows that the total issuance of the seven Bitcoin-pegged coins based on Ethereum (WBTC, renBTC, HBTC, imBTC, sBTC, BTC++ and
pBTC) included in its collection has reached nearly 13,000, and as of now it is 12,978.

Statistics on the issuance of Bitcoin-pegged coins based on Ethereum, source: DeBank

A month ago, the total issuance of these seven Bitcoin-pegged coins was only 5381. This means that the value has surged by more than 140% in one month.

Among them, wBTC (wrapped Bitcoin), as the first BTC-pegged coin issued on Ethereum to be launched (January 2019), has a high share in Bitcoin-pegged coins, with a current circulation of 9,389 coins, accounting for 72.35%, followed by renBTC (10.87%) and HBTC (5.47%). RenBTC, which was launched on the Ethereum network at the end of May this year, successfully obtained a share of about 10% in less than two months after its launch, with an issuance of 1,413 coins.

What caused the surge in the issuance of Bitcoin-pegged coins? 

The explosive growth in the issuance of Bitcoin-pegged coins is largely due to WBTC, and the issuance of WBTC has increased significantly since the second quarter of this year. This can be mainly attributed to the following three progress or achievements made by WBTC.

1. MakerDAO added WBTC as Dai collateral. On May 3, MakerDAO added WBTC as collateral for Dai by executing the voting results, providing a more direct platform for Bitcoin to enter the DeFi field. WBTC is the fourth collateral included in the Maker protocol after ETH, BAT and USDC. Users can pledge WBTC to generate Dai.

2. Increased holdings and pledges of the centralized lending platform NEXO. On May 12 and 22, a total of 2,500 bitcoins (nearly 1,000 and 1,500 respectively) were replaced with WBTC. The holder is the financing platform CoinList. According to TokenInsight analysis, the CoinList platform transferred the WBTC obtained on the same day to the Nexo wallet address, and Nexo was the real holder of the bitcoin. Later, on May 20 and 22, Nexo pledged these WBTC through the Maker protocol to generate a total of 9 million Dai.

On May 12, a demand for nearly 1,000 WBTC, source: WBTC official website

On May 22, a demand for nearly 1,500 WBTC, source: WBTC official website

3. Participate in the "Liquidity Mining Incentive" program. On June 18, the synthetic asset platform Synthetix announced a new liquidity incentive pool in conjunction with Curve and Ren
to provide liquidity incentives for Bitcoin-pegged coins based on Ethereum. The goal is to create the most liquid Ethereum-based Bitcoin pool, providing traders with the lowest slippage rate for trading between sBTC, renBTC
and WBTC. The pool will provide liquidity providers with many token incentives. Medium author Lucas Outumuro pointed out that this partnership will bring
WBTC into the "crypto-agrarian age". Bitcoin holders can now earn income by providing liquidity in the Bitcoin-pegged coin network.

Bitcoin Pegged Coin Chain Data

Next, we will take a look at the on-chain data of Bitcoin-pegged coins. As mentioned above, WBTC accounts for more than 70% of Bitcoin-pegged coins. The on-chain data of WBTC can largely reflect the data of Bitcoin-pegged coins.

1. Incentives drive WBTC daily active addresses to a peak

In 2019, WBTC's on-chain activity stagnated, with an average of only 58 active addresses per day. With the continuous increase in use cases and the introduction of incentives, the number of WBTC active addresses continued to rise after May 2020.

Number of WBTC active addresses, source: IntoTheBlock

For example, after MakerDAO added WBTC as collateral for Dai, WBTC's daily active users exceeded 300 for the first time. Since then, the number has remained at a high level. With the popularity of liquidity mining in June, WBTC also began to plan to participate in this craze. The liquidity incentive pool jointly launched by Synthetix, Curve and Ren has increased the number of WBTC's daily active addresses by nearly 5 times in 5 days.

Overall, through integration with other DeFi protocols, the average daily active addresses of WBTC have increased to 169 so far in 2020, about three times that of 2019. In addition, as of now, the total number of WBTC addresses has increased to 3.308, the total number of renBTC addresses is 156, and the total number of HBTC addresses is 85.

2. WBTC large transactions surged 200 times within 6 days of the implementation of incentives

IntoTheBlock classifies transactions worth more than $100,000 as large transactions. In 2019 and the first quarter of 2020, WBTC's large transactions were almost zero.

Similar to the number of daily active addresses, after MakerDAO added WBTC as Dai collateral, WBTC's large transactions reached a high of $28 million for the first time, and exploded within a few days after the launch of the liquidity incentive pools of Synthetix, Curve and Ren, surging from near zero to over $300 million. Specifically, after the distribution of income incentives to liquidity providers, WBTC's large transaction volume increased by about 200 times in 6 days.

WBTC large transaction situation, source: IntoTheBlock

3. The average balance of WBTC holders once exceeded $30,000 at the end of June

Since the second quarter of this year, the average balance of WBTC holders has also been in a state of continuous growth. It once exceeded $30,000 on June 27, and now it has fallen slightly to $22,000. At the beginning of this year, the average balance of WBTC holders was only $2,350.

Average balance of WBTC holders, source: IntoTheBlock

With the birth of the liquidity mining model, the DeFi market has been thoroughly ignited, and some emerging organizations have emerged that use the smart contract function on the Ethereum blockchain to participate in the DeFi market. From the surge in the number of active addresses, large transaction volume and average balance of WBTC, it can be concluded that more and more new institutions and large participants are also participating in the DeFi market through WBTC.

Although only 0.05% of the total supply of Bitcoin is currently placed in Ethereum smart contracts, as long as there are no major vulnerabilities in the basic protocol, the above incentive mechanism may enable participants to continue to provide liquidity. Ultimately, both Bitcoin and Ethereum will benefit from it.