Bitcoin-Backed Ethereum Token Forced to Shut Down Over Shoddy Code
Decentralized finance (also known as ‘DeFi’) is a growing part of the Ethereum ecosystem. Although the total amount of funds locked in DeFi-related smart contracts has plummeted in the last few months, the sector still shows promise.
In fact, since May, we have seen a new development in the DeFi ecosystem: the growth of wrapped BTC (WBTC) on Ethereum.
WBTC on Ethereum Tops $22.5M
Bitcoin has become a hot asset on Ethereum in the past few weeks. On March 1, around $9.73M WBTC was represented in Ethereum’s DeFi ecosystem. That number has now grown to a stunning $22.5M, according to DeFi Pulse.
The amount of WBTC on Ethereum is now more than twice as much as what is locked on Bitcoin’s own Lightning Network. According to DeFi Pulse, Lightning Network only has around $9.2M worth of BTC locked into it.
Ethereum is clearly dominating Bitcoin’s own ecosystem.
Is DeFi the Future?
The emergence of WBTC on Ethereum makes a compelling case that DeFi is here to stay. However, security for DeFi-related products still leaves much to be desired.
Last month, the DeFi app Lendf.Me suffered a hack and $25M was drained from its smart contract. Eventually, the funds were returned—only after being trolled by the hacker himself who seemed to revel in it. There have been many other instances of hacking which has caused some commentators to grow entirely skeptical of the sector. Some have even called DeFi a ’24-7 multi-million dollar hacker honeypot.’
However, its advocates say we are still early and liken DeFi to the internet in 1997. As of now, DeFi products have not proven themselves reliable enough to protect assets. However, the amount of WBTC on Ethereum now indicates that the sector is likely here to stay.