Wrapped Bitcoin (WBTC) is an ERC20 token that represents Bitcoin (BTC) on the Ethereum blockchain. Designed to bring Bitcoin’s value into the decentralized finance (DeFi) ecosystem, WBTC maintains a strict 1:1 peg with Bitcoin, making it one of the most trusted and widely adopted wrapped assets in the crypto space. Managed by the decentralized WBTC DAO, this innovative token was launched in 2019 through a collaboration between BitGo, Kyber Network, and Ren.
Unlike traditional stablecoins that are backed by fiat currencies like the U.S. dollar, WBTC uses Bitcoin as its underlying asset. This means every WBTC token in circulation is fully backed by one actual Bitcoin held in reserve. Users can convert BTC to WBTC through authorized partners—called merchants—and reverse the process when needed. With a maximum supply capped at 21 million tokens—mirroring Bitcoin’s own limit—WBTC ensures scarcity and long-term value retention.
One of the most compelling benefits of WBTC is its seamless integration with Ethereum-based wallets, decentralized applications (dApps), and smart contracts. This compatibility allows Bitcoin holders to participate in DeFi activities such as yield farming, liquidity provision, and decentralized trading without giving up their exposure to BTC.
👉 Discover how WBTC unlocks new earning opportunities across DeFi platforms.
How Does Wrapped Bitcoin Work?
At its core, WBTC converts Bitcoin into a standardized ERC20 format, enabling it to function within Ethereum’s robust ecosystem. This transformation allows developers and users to leverage Bitcoin’s liquidity within smart contract environments—something native BTC cannot do natively.
The operation of WBTC relies on two key entities: custodians and merchants.
- Custodians are responsible for securely holding the Bitcoin reserves that back WBTC. They also handle the minting process—issuing new WBTC tokens when merchants submit BTC for wrapping. BitGo is currently the primary custodian, ensuring institutional-grade security and transparency.
- Merchants act as intermediaries between users and custodians. When a user wants to wrap BTC, they send it to a merchant, who then requests the custodian to mint an equivalent amount of WBTC. Conversely, when unwrapping, merchants initiate a burn request—destroying WBTC tokens on-chain—and the custodian releases the corresponding BTC back to the user.
This two-party system enhances trust and accountability while maintaining decentralization through the WBTC DAO, where stakeholders vote on policy changes, new partners, and protocol upgrades.
Key Use Cases of WBTC in DeFi
For Bitcoin holders, WBTC opens the door to the fast-growing world of decentralized finance. Instead of letting BTC sit idle in cold storage or centralized exchanges, users can now deploy their assets across various yield-generating strategies:
- Liquidity Provision: WBTC is supported on major decentralized exchanges like Uniswap, SushiSwap, and Curve. Users can supply WBTC-BTC or WBTC-ETH pairs to liquidity pools and earn trading fees.
- Yield Farming & Staking: Many DeFi protocols allow users to stake WBTC or deposit it into lending platforms such as Aave and Compound to earn interest or governance tokens.
- Collateral for Loans: WBTC can be used as collateral to borrow other cryptocurrencies or stablecoins without selling the underlying asset.
- Automated Trading Strategies: Platforms like TokenSets use WBTC in algorithmic portfolios that automatically rebalance between assets like WBTC and ETH to optimize returns.
Additionally, WBTC is listed on major centralized exchanges including Binance, Coinbase, and Kraken, further increasing its accessibility and liquidity across both centralized and decentralized markets.
👉 See how you can start using WBTC in high-yield DeFi protocols today.
WBTC Market Data & Performance (As of 2025)
As of now, the current price of Wrapped Bitcoin (WBTC) stands at $108,964, reflecting a slight decrease of -0.8% over the past 24 hours. Despite this short-term dip, WBTC continues to play a critical role in bridging Bitcoin with Ethereum’s DeFi ecosystem.
- All-Time High (ATH): WBTC reached its peak value of $111,720 on May 22, 2025, and is currently trading -2.47% below that high.
- Circulating Supply: Approximately 128,850 WBTC tokens
- Maximum Supply: Capped at 129,140 tokens, closely aligned with available wrapped BTC
- 24-Hour Trading Volume: $226.08 million, indicating strong market activity
- Market Capitalization: $14.04 billion
- Crypto Market Share: WBTC accounts for 0.40% of the total global cryptocurrency market cap
These metrics underscore WBTC’s significance as a bridge asset, facilitating billions in cross-chain value transfer and powering countless DeFi transactions daily.
Frequently Asked Questions (FAQ)
What is the difference between BTC and WBTC?
BTC is the original Bitcoin that operates on its own blockchain, while WBTC is a tokenized version of Bitcoin issued on the Ethereum network as an ERC20 token. This allows WBTC to be used in Ethereum-based dApps and smart contracts, which native BTC cannot interact with directly.
Is WBTC safe to use?
Yes, WBTC is considered secure due to its transparent reserve model, regular audits, and governance by the decentralized WBTC DAO. However, users should always interact with trusted merchants and custodians to minimize counterparty risk.
Can I convert WBTC back to BTC?
Absolutely. The process of converting WBTC back to BTC is called “unwrapping.” You can do this through authorized merchants who will burn your WBTC tokens and release the equivalent amount of BTC from custody.
Why does WBTC matter for DeFi?
WBTC brings Bitcoin’s massive liquidity into DeFi ecosystems. Since Bitcoin has the largest market cap and most investor trust among cryptocurrencies, integrating it into DeFi via WBTC enables more robust lending markets, trading pairs, and investment strategies.
Who controls the reserves for WBTC?
BitGo serves as the primary custodian for WBTC reserves, holding all the Bitcoin that backs the issued tokens. These reserves are regularly audited to ensure full backing and transparency.
Does WBTC have a supply cap?
While WBTC itself doesn’t enforce a hard 21 million cap programmatically like BTC, its issuance is strictly limited by the amount of Bitcoin held in reserve. In practice, the total supply mirrors Bitcoin’s scarcity principles.
👉 Learn how WBTC compares to other wrapped assets and why it leads the market.
Final Thoughts
Wrapped Bitcoin (WBTC) plays a pivotal role in connecting two of the most powerful blockchains—Bitcoin and Ethereum. By enabling BTC holders to participate in DeFi without sacrificing ownership, WBTC enhances capital efficiency, drives innovation, and expands financial freedom across networks.
Whether you're looking to earn yield, trade across DEXs, or use BTC as collateral, WBTC offers a secure and seamless pathway into Ethereum’s thriving ecosystem. As cross-chain interoperability becomes increasingly important, WBTC remains a foundational building block for the future of decentralized finance.
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