Hey yo, what is up with the new week & going on with my people the Chico Army, and if you don’t know who I am, just a lowly viewer of the tube. I’m Tyler, the host of the only crypto channel, that delivers you that fire content no matter what. You know our real-life twisted metal. It’s time for Chico Crypto! Well isn’t this a twisted thought of mine, Ethereum is going to be the gravity well, that sucks in all assets, crypto & beyond and it begins with the granddaddy BTC.
I’m sure you saw the headline over the weekend from Coindesk “Bitcoins Are Being Tokenized Faster Than They’re Mined as DeFi Craze Continues”. And in the article is shows, that over last week, there were more wrapped bitcoin, WBTC minted, than were mined by the bitcoin protocol & participating miners. Now you guys should know what WBTC is, it’s a centralized as of now, version of tokenizing bitcoin on Ethereum, which uses a combination of customers, merchants, and centralized custodians, who watch over the placed BTC.
So, a centralized version of BTC on Ethereum is already overtaking and outpacing bitcoin mining production. What’s going to happen, when it’s fully trustless, and that bridge is fully secure?? Well, going to the WBTC community list, this centralized version was made possible, through a collaboration of crypto companies coming together, including Kyber, REN, Custodian BitGo, Set Protocol, Compound, Maker & more.
Now, within that list of projects, there is a certain one that is taking the next leap into Bitcoin on Ethereum & creating the bridge, that doesn’t have a central gatekeeper, saying who can cross, when & why but its open to all, at any time, for any reason. Were you able to guess right!? That project is REN & I don’t think many people realize, the value in what they have brought to the table.
So how are they getting Bitcoin on Ethereum in a trustless way? Well through the RENvm, or virtual machine which got its mainnet release, just in late May of this year. How does it work? Well I’ve explained it a few times, so here is a quick version, dapps, can use the VM, to swap BTC for renBTC, which is the ethereum version of the BTC. IN the background, the VM is a distributed network of darknodes, over 1100 nodes right now to be exact, where all the nodes take custody, of the BTC private key the VM aka network of nodes then mints the renBTC and it’s sent to the customer or requesters Ethereum wallet to use in the DeFi Ecosystem.
Now in reality, the RENVM has only had 2.5 months on the mainnet a sliver in time, but the VM has picked up like crazy, going to the chart on daily mints of renBTC it was slow to start, but by the middle of June mints started to pick up, getting above 250 per day, then by the middle of August we broke the 500 level, actually getting to 750 but look at just a couple days ago, over 1500 renBTC minted in 1 day, which means over 1500 BTC were locked in the renVM with those dark nodes. That is over 17 million dollars in just 1 day, and if we go to their dashboard, the total value minted as of yesterday was 91 million, which is over 18 percent in just 1 day.
Ya things are picking up for REN & it has everything to do with BTC on ETH because if you didn’t know, the RENVM works with other cryptos and blockchains. If we go back to the dashboard, we can see both Zcash and bitcoin cash are available to mint, but it’s not being utilized, as all the minting is being done with BTC, only a total of just over 27 thousand of the 91 million minted is in either bcash or Zcash.
Pretty much nada, zilch, zero. So why is this? Why has the number of bitcoin tokenized on Ethereum risen so substantially in the past month between the RENvm and other options, like WBTC, and even more we have grown from 15000 BTC on ETH 30 days ago, to 45000 as of yesterday.
Well, DeFi is your answer and let me explain. There are whales, sitting on stacks of BTC…some with between 100 to 1 thousand BTC, and even some with 1000+. This is seen from Bitinfo, and their wallet tracked rich list there are 13,799 wallets with between 100 to 1k BTC, and there are 2196 wallets with 1k+ BTC.
Now that is a lot of money, even at 100 BTC it’s over 1 million dollars, these are the guys in my opinion, who are experimenting with these protocols making a large bulk of the mints. As they have the risk tolerance, if something goes bad, it’s worse if someone loses 1 BTC when they only have 5, than if someone loses 5 if they had 100.
So we know who is doing the majority of the Ethereum BTC mints, but why? What are they doing with it? You gotta know, they ain’t just holding it in their wallets, as that is what their regular ole BTC was doing, sitting and collecting dust. Well, they are using it in DeFi, my friends. And I’m going to show you a freaking amazing example of it.
So, I have covered this DeFi protocol before, TokenSets in a very informative video of what it is, and how it works. if you are interested in this, the video is in the description. But a quick overview, it’s a trading protocol of sorts, where you buy into certain preset trading strategies, based on automation aka robotic sets, or people, called social sets.
The strategies are just tokens, which people buy and your share of the sets tokens, represents your share of the strategies pool. And it grows and falls, based on the underlying set token trading strategy. Now I wonder which token set is the largest?? Which has grown the furthest since the launch? Well in the social category, sorting by highest set cap, we can see it’s the BTC network demand SET 2. With over 128 BTC with it.
So what does this setting do? Well into the details of it the set was created by the bitcoin data analytics firm byte tree, and the set “ aims to protect investors against large drawdowns in bitcoin’s value and boost overall risk-adjusted returns. It will enter bitcoin when the fundamental network demand is strong and exit into compound USDC on weakness.
The algorithm incorporates four network demand metrics across six different indicators, to give an overall allocation score. These metrics are Network Fees, Transaction Value, Velocity and Miners’ Change in Inventory. So it automatically goes into and out of stablecoins, and back into and out of Bitcoin no not regular BITCOIN, but wrapped BITCOIN, based on BTC fundamental data from byte tree.
That is not freaking possible right now on the BTC blockchain, where a smart contract does the trading for you, in a trustless way. This is just one example, of where this BITCOIN is going & in a second I’ll show you more, but first a word from the sponsor of this video, Coinzoom, and like always the full details of our agreement are down in the description. Now Coinzoom is the full suite, of crypto options, including an sleek and fast crypto exchange, with fiat on and off-ramps, visa card crypto cards, & more.
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This feature keeps your skin in the crypto game if you would like. For each purchase with a Coin Zoom card, you can automatically have it round up to the nearest dollar amount, and that fiat amount is transferred back to your coin zoom account since Merchants are taking cash and your crypto is being converted into cash for them, the debit round will return it automatically, the rounded amount back into the crypto or cryptos of your choice. That just a couple of the perks, there are more, like cashback rewards, cardholder trading fee discounts on the exchange, earning interest by holding your crypto with coinzoom, staking rewards for both algorand and dash, plus a whole lot more.
So if you’re looking for another more robust regulated fiat option within the US, Coin Zoom just might be right up your alley! Now back to what else you can do with your Bitcoin on the gravity well Ethereum. Set protocol, decentralized copy trading, and strategies not bad, but what else? Well we can check, going to coingecko and looking at markets, we can see where wBTC volume is coming from, by sorting by highest volume #1 Compound, #2 Curve Finance, #3 Uniswap & #4 balancer & then RenBTC not on compound yet but #1 is Curve, #2 is a balancer, and #3 and #4 is uniswap and balancer.
Similar, with Curve, Balancer, and swappers like Uniwap and one inch. But first let’s examine, WBTC on the compound. Here are the market details, as we can see 2232 WBTC are being supplied, which is over 19 million dollars in Bitcoin. Now if we look at APY, from supplying it to borrowers, it is just 63 percent. Why would people do this for such a low return? Well, there is a market being made, and I wouldn’t doubt some whales are playing both sides. Now if you see the distribution APY, you also get a 1.36 percent for supplying due to compound governance token rewards.
This is the supply side though, Let’s take a look at the borrow side of WBTC as we can see to borrow BTC, you would be paying an interest rate of 5.84 percent per year, Yikes! but since Compound governance tokens, are even given to borrowers, not only suppliers, you can see they have a distribution APY right now of 11.87 percent, thus to borrow WBTC right now, you are actually getting paid, as you have a interest rate of negative 5.86 percent.
So, farming those compound tokens, and providing liquidity. That’s what it’s all about right now, but there are also those other ones, like Curve Finance, Balancer and the swappers. What is going on there? Well going back to wBTCs markets, the second largest is one of Curve’s and that is the WBTC and REN BTC market with over 14 million in 24-hour volume. The centralized bitcoin on Ethereum and a decentralized version getting swapped back & forth interesting but why? Well, this has to do with you getting in on the action.
Do you have BTC just collecting dust & want to quickly get into the world of bitcoin DeFi? Well, the Wbtc cafe is the best place to do that & this was created none other than by REN. What it does is allows you to skip those checks, and mint wBTC, any fraction, right through the application & it connects right up to online and hardware wallets.
The WBTC cafe uses a combination of the run VM, renBTC, WBTC, and curve finance to accomplish this, as the curve is the swapping protocol created for minimal slippage. So you can get WBTC in a trustless manner & people are taking advantage of this, and the more people that demand WBTC through the cafe, the more renBTC that is needed self-reinforcing, and solidifying that Ethereum is the gravity well cheers viewers, I’ll see you next time!
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