Anchoring Bitcoin in the Ethereum Ecosystem: Rise, Challenges, and Future

Bitcoin and Ethereum, as the two giants in the cryptocurrency field, have long had different emphases on their monetary attributes. Bitcoin is typically seen as the base currency, the "digital gold" and the anchor of the crypto world; while Ethereum is more focused on the application layer of currency, such as over-collateralizing ETH to create "derivative coins."

However, the rapidly growing DeFi sector seems to have broken this delicate division of labor, even allowing Ethereum to overshadow the currency role. The Bitcoin pegged in ERC-20 format has rapidly expanded in the past few months, especially in July, with its issuance increasing by about 70%. According to data platform statistics, as of August 5th, the total amount of Bitcoin pegged in the Ethereum ecosystem has reached 20,472 coins, close to 1% of the total Bitcoin supply, accounting for 0.59% of the total market cap of ETH.

From the perspective of the internal structure anchored to Bitcoin, wBTC dominates with a share of 75.8%, while Ren BTC and sBTC account for 11.2% and 4.89% respectively, adding up to over 90%. These anchored Bitcoins perform outstandingly in metrics such as total address count, activity, and large transfers. In particular, renBTC saw a remarkable increase of 111% in total address count over 30 days, with an average active address ratio reaching 42.78%, far exceeding that of ETH and USDt-erc20 during the same period.

Behind the explosive rise of Bitcoin pegging, there are two key factors: first, leading lending projects opening up staking, such as MakerDAO allowing the use of wBTC to generate DAI; second, the "liquidity mining" frenzy driven by Compound, followed by collaborations from Curve, Synthetix, and REN. These initiatives have greatly enhanced the activity and use cases of Bitcoin pegging.

Despite the strong rise momentum, the development of Bitcoin-backed assets still faces some bottlenecks: limited scalability, high operational complexity, and excessive asset concentration. In addition, some viewpoints suggest that the rise of Bitcoin-backed assets may affect the security of the native Bitcoin network, but others believe that this is a win-win situation for both Bitcoin and Ethereum.

From the recent on-chain data, some key indicators primarily anchored to Bitcoin have shown signs of growth fatigue. As the enthusiasm for liquidity mining gradually fades, whether this rapidly emerging asset class can continue to develop steadily remains to be seen. In the future, as the market matures, the application scenarios anchored to Bitcoin are expected to further expand, but its long-term development trajectory still needs time to be tested.