Wrapped BTC

WBTC was launched in January 2019 in a collaboration between BitGo, Kyber Network and Ren to allow users to bring their native Bitcoin into the Ethereum ecosystem.

All of the BTC backing WBTC are stored by BitGo, a centralized entity. BitGo is viewed as a central point of failure because it’s the only custodian overseeing WBTC at the moment. Users must trust BitGo to safely store their BTC and honor the users’ redemption requests.

Like all wrapped assets, Wrapped Bitcoin is secured by a smart contract which is responsible for minting and burning WBTC tokens. Bitcoin that is used as collateral for minting WBTC is held by a qualified custodian, BitGo, which adheres to regulatory standards aimed at protecting funds from loss or misuse. In August 2024, BitGo announced it would adopt a multi-jurisdictional and multi-institutional custody structure to further protect assets. WBTC exists on the Ethereum network and secured by Proof of Stake mechanics, while Bitcoin is secured by the Bitcoin network which operates on Proof of Work. 

Wrapped Bitcoin is a tokenized form of Bitcoin. To mint wrapped Bitcoin, a merchant first initiates the mint process by interacting with a smart contract. They then deposit Bitcoin with the custodian, who mints a corresponding amount WBTC and sends it to the smart contract. The smart contract then transfers an equal amount of WBTC as deposited to the merchant.

WBTC can be used in the same way as any other ERC-20 token. It can interact with smart contracts, be used for trading on a DEX like Matcha, and be used as collateral on lending protocols and other platforms.

To redeem WBTC tokens for Bitcoin, you can use a centralized exchange that supports WBTC to BTC unwraps. When WBTC is converted to BTC, the WBTC tokens are burned and Bitcoin is released by the custodian. 

Bitcoin can be wrapped as WBTC by using one of the bridge providers listed on the official WBTC website.

WBTC is natively issued on Ethereum, Base, Kava, Osmosis, and Tron, where WBTC can be redeemed directly for Bitcoin at a 1:1 ratio.

Bridged versions of WBTC are also found on Polygon, Arbitrum, OP Mainnet, and Avalanche. These bridged versions can not be redeemed directly for Bitcoin and are not backed by Bitcoin held by the custodian. You can make a cross chain swap on Matcha to WBTC on Ethereum for a redeemable WBTC token.

WBTC tokens are native to the chain they are issued on and can be stored in a compatible wallet. For example, WBTC on Ethereum can be stored on any wallet supporting Ethereum ERC-20 tokens, by sending the tokens to your wallet address. Likewise, WBTC on Base can be sent to the account address your wallet shows when the Base network is selected.

Hardware wallets which support Ethereum are also able to store WBTC by transferring the tokens to your Ethereum account address.

Wrapped Bitcoin cannot be sent using the Bitcoin network or Bitcoin Lightning network. You must unwrap WBTC to Bitcoin before using these networks or you may lose your funds.