Researcher Nathan Yu commented on the recent involvement of the Bitcoin packaging token WBTC company by Tron founder Justin Sun, and the scale of the impact it may have on DeFi. Previously, MakerDAO has carried out risk control mechanisms for the risks that WBTC may bring.
(Brother Sun’s entry into WBTC caused concern! BitGo and BiT Global reached a new cooperation, and the MakerDAO proposal launched risk control)
(MakerDAO dropped WBTC by abandoning WBTC and stabilizing the fee rate)
If something goes wrong with WBTC, how much impact will it have on Ethereum TVL?
Nathan Yu said that there are four base currencies in the entire Ethereum DeFi ecosystem, and WBTC is one of them. Anyone who has studied money banking knows that when the base money supply shrinks for some reason, it will have a great negative impact on the results of the previously expanded credit expansion. The above-mentioned transmission mechanism operates exactly the same way in the DeFi ecosystem as in traditional finance. Even because of the open and transparent nature of data on the chain, we can more easily evaluate the impact.
Here we only count the top 100 addresses holding WBTC. The top 100 addresses hold 76% of the WBTC supply, approximately 92,829 coins. Of these 92,829, 64,119 remain in addresses with smart contract functions, and smart contracts can continue to be dismantled according to the type of financial services.
The financial ecology derived from WBTC can be mainly divided into the following four categories:
Collateral for on-chain lending services
Hedging of cross-chain contracts (the cross-chain mechanism is similar to multinationals, such as TSMC ADR Depositary Receipt account)
Act as a decentralized exchange liquidity provider (DEX Liquidity Provider, DEX LP's corresponding role in traditional finance is a combination of dealer and dealer funding)
Other types
The WBTC locked in the cross-chain contract affects other chains and is not included in the calculation. Other types of smart contracts are not included in the calculation because they do not open write contracts. Although most lending protocols and DEX LP are credit creations, most of the tokens derived from credit creation are not transferable and cannot be accepted by other contracts.
But DAI is excepted. Using WBTC as collateral to borrow DAI in Maker and Spark will create a new supply of DAI, and because these DAI need to pay annual interest of 7.25% to 8.5%, they will definitely be invested in other protocols for transactions to earn higher profits. Yield.
At this point we can calculate the TVL contribution of WBTC to the Ethereum DeFi ecosystem. In the figure below, I use BTC for pricing. The TVL contribution of WBTC to the Ethereum financial ecosystem, totaling approximately US$9 billion, is currently US$4.44 billion, accounting for approximately 9% of the TVL of the Ethereum DeFi ecosystem.
This article Yu Zhe'an's point of view｜How big will the impact on Ethereum's TVL be if something goes wrong with WBTC? First appeared in Chain News ABMedia.
