A brief history
wBTC was launched in January 2019 by a consortium of Bitgo, Kyber Network, and Republic Protocol. The goal of the wBTC protocol was to bring the liquidity of Bitcoin to the Ethereum blockchain, and in the 18 months following its launch, users converted over $800 million in Bitcoin into wBTC. In this way, wBTC operates as a bridge between bitcoin and Ethereum, allowing Bitcoin users to access decentralized finance (DeFi) applications and for Ethereum applications to gain additional liquidity. The process of converting BTC to wBTC is facilitated by three entities: Custodians, Merchants, and DAO. Custodians are responsible for minting wBTC and keeping Bitcoin reserves secure. Merchants distribute the minted wBTC and destroy excess wBTC. Lastly, the DAO (decentralized autonomous organization) is responsible for smart contract changes and the addition or removal of merchants and custodians. Once wBTC has been deposited in a user’s Ethereum address, the asset can be used in the network’s financial applications for savings, lending, and investment services, in a way that may offer advantages over existing options.

WBTC in practice
As mentioned before, users who wish to mint wBTC must first deposit BTC and go through the processes carried out by merchants and custodians. Users can also convert their WBTC back into regular BTC whenever they like, making it easy for investors to go back and forth between the traditional Bitcoin ecosystem and any decentralized application (DApp) on the Ethereum network. It should be noted that there are fees for wrapping Bitcoin- but they can be as low as 0.025%. wBTC users also wind up having to pay Ethereum gas fees for transacting within the DeFi ecosystem.