Wrapped Bitcoin (WBTC)
A token representing Bitcoin on another blockchain, typically Ethereum, backed one-to-one by actual Bitcoin held in custody, letting BTC be used within that chain's DeFi ecosystem.
Wrapped Bitcoin is a specific, widely used wrapped token (see Kaavon's "Wrapped Token" glossary definition) representing Bitcoin on another blockchain, most commonly Ethereum, where each unit is backed one-to-one by actual Bitcoin held by a custodian on the Bitcoin network itself. This lets holders use their Bitcoin's economic value within another chain's DeFi ecosystem — for lending, providing liquidity, or using as collateral — despite Bitcoin's own base chain not natively supporting the kind of complex smart contract functionality those use cases require.
Because WBTC relies on a custodian holding the actual underlying Bitcoin and authorizing the minting and burning of WBTC tokens correspondingly, it introduces a trust assumption distinct from holding Bitcoin directly in a self-custodied wallet: holders are trusting the custodian to maintain full, honest backing and to honor redemptions, making WBTC's security model closer to a centralized, custodied asset than to Bitcoin's own trust-minimized design. Several alternative Bitcoin-wrapping approaches have emerged specifically aiming to reduce or eliminate this custodial trust requirement.
Examples
- A DeFi user wanting to use their Bitcoin's value as collateral on an Ethereum lending protocol might first convert it to WBTC, since Bitcoin's own chain doesn't natively support that protocol's smart contracts.
- Holding WBTC carries a custodial trust assumption that holding Bitcoin directly in a self-custodied wallet doesn't, since WBTC's backing depends on the custodian honestly maintaining full reserves.