- A Celsius-funded wallet burned 22,732 WBTC in two days.
- WBTC total supply falls to 153,164, the lowest since March 2021.
- Dwindling WBTC supply is linked to the challenges faced by the crypto industry in the past year.
Data from Dunes, the on-chain analytics platform, shows that 22,732 WBTC were burned in two days. An initial batch of 11,500 WBTC tokens was burned on February 27, 2023, followed by another batch of 11,232, 24 hours later. According to reports, wallets related to the defunct crypto lender Celsius executed both exercises.
With the recent token burn, the total supply of WBTC dropped by 22,384 in February 2023. That is roughly 15% of the total supply of WBTC tokens, bringing the value down to 153,164, the lowest since March 2021, according to data from Dunes analytics.
WBTC is an ERC-20 token based on the Ethereum network. Its price is pegged with that of Bitcoin on a 1:1 ratio. Bitgo developed WBTC in 2019 in partnership with Ren, a blockchain interoperability protocol, and the multichain liquidity platform, Kyber.
Merchants who want to exchange their WBTC for BTC adopt the WBTC burn process. They do so by initiating a burn transaction and alerting the WBTC custodians. The custodians comprise 30 unique members of a decentralized autonomous organization, WBTC DAO.
Merchants transfer real Bitcoin to a custodian address on the Bitcoin blockchain and lock it. Once the BTC is received, an equivalent amount of WBTC is minted on Ethereum to complete the process. The custodian address executes this aspect of the protocol.
WBTC became popular in the DeFi industry by integrating into the world of Ethereum wallets, adding to the increased speed of transactions compared with the traditional Bitcoin token. The highest-ever WBTC supply was recorded in April 2022, when the value climbed to 285,000. During that period, the price of Bitcoin was around $48,000.
Users attribute the dwindling supply of WBTC to the challenges faced by the crypto industry in the past year. The Terra collapse and the FTX debacle have had similar impacts on WBTC. Lenders are observed to be redeeming their WBTC, fearing what could become of their investments if things eventually go south.
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