Highlighting the increasing utility of Ethereum and the position of DeFi, the number of BTC on the pioneer smart contracting platform continues to swell. On July 31, 2020, there were 20,309 BTC ($227.3 million) on Ethereum versus the 996.37 BTC in the Lightning Network (LN). 15,521 BTC or $173.7 million, had been tokenized as wBTC according to statistics from BTC on Ethereum.
Quest for Better Rates, DeFi as an Option
Open Finance, or simply DeFi, supporters argue, is a financial revolution. With the investment world being disillusioned by the turn of event in the traditional market, it appears as if trustless financial dApps could be the only fort promising above-market rates.
The Coronavirus scourge has been deflating to governments and businesses. Not only are they struggling to control the pandemic, but businesses are also strained.
To stimulate activity and protect major employers from the jaws of bankruptcy, central banks are now printing money at record levels. Meanwhile, interest rates are near zero.
This is forcing investors to seek alternatives. Bitcoin has turned out to be the major beneficiary.
Bearing a direct correlation with gold, BTC continues to post stellar results. It is currently trading above $11,000 according to Coinbase statistic. Despite gains, BTC owners can ONLY trade or hold.
Meanwhile, ETH holders can diversify their income streams through capital gains (its performance has so far trounced BTC’s), lending, or liquidity provision via Balancer or Uniswap when they can earn fees. All this is because of DeFi, a general term describing trustless finance operations in Ethereum.
BTC Flowing to Ethereum
Bridges like the Republic Protocol and Wrapped BTC enable BTC holders to tokenize their holdings. After the acceptance of wBTC by Maker CDP as collateral, the door of opportunity was flung open. This was the primary cause of migration as Bitcoin holders sought to diversify their revenue streams.
Justin Drake, an Ethereum researcher, notes that the flow of BTC to Ethereum has been rising 10X in the last six months for the last 18 months. By mid-2021, Justin projects over 10 percent of BTC in circulation will be tokenized.
Lightning Network Viability Questionable
The 20,309 BTC on Ethereum means 20X BTC is now on the smart contracting network than in LN, the Layer 2 scaling solution.
The LN capacity on July 31, 2020 (as aforementioned) stood at 996.37 BTC ($11 million) calling to question its viability in the face of DeFi.
On July 24, NiceHash began supporting the Bitcoin Lightning Network after the completion of their beta testing.