Thread by @jpurd17

BTC on Ethereum is blowing up.

After starting the year with <1,000 there is now over 16,000 ($150 million)

This is in large part due to wBTC which is on its way to become the “tether of pegged bitcoin”

1/

With tokens pegged to external assets there is a fundamental tradeoff:

Scalability vs. Trustlessness

We're seeing this play out with stablecoins where directly redeemable tokens can scale much quicker than more trustless, crypto collateralized versions which are less capital efficient and require arbitrageurs to assume more risk
messari.io/chart/stableco…

This is why tether/USDC have reached billions while Dai has not and remains stubbornly above the peg, unable to meet the demand

messari.io/chart/stableco…

To exacerbate this trend, users simply don’t care about the mechanism with which these assets are created.

Tether has been mired in controversy yet even when the fears come true… it stays king
bloomberg.com/news/articles/…

Because what do users actually care about? What the token can do for them. This means:

Low slippage

Holding its peg

Not getting censored/blacklisted

Usability across DeFi applications (which we’re continuing to see heightened demand for)

For these reasons wBTC is poised to continue its dominance in the short to medium term

That being said, there’s still the looming threat of government intervention once these assets grow large enough to catch regulator’s attention

No one cares about trustlessness. Until you have to

If blacklists become rampant or if they’re forced into a KYC’d whitelist model then the trustless alternatives will shine

But until then we’ll likely continue watching wBTC dominate
messari.io/article/the-te…