Wrapped Bitcoin (WBTC) is an ERC20 token that enables Bitcoin to be utilized on the Ethereum network and other blockchains such as Polygon and BNB Chain. It introduces Bitcoin’s liquidity and stability into DeFi allowing users to trade, lend, borrow and use WBTC as collateral in the DeFi space. Having started in 2019, WBTC essentially bridges the traditional Bitcoin financial system into Ethereum.
How to Stake Wrapped Bitcoin (WBTC)
Staking Wrapped Bitcoin (WBTC) offers two main ways to earn rewards: either in centralized exchanges (CEX) or decentralized ones. Although these are not the conventional proof-of-stake (PoS), these require users to deposit their WBTC to earn yield which in essence makes it a staking mechanism. Below are steps to stake WBTC using these two approaches:
Stake in a Centralized Exchange
When it concerns staking WBTC, one can do it directly on a centralized exchange, such as Binance. This method involves staking money in the liquidity pools and earning income through transaction fees and interest.
Step 1: Access Binance Earn
Open the Binance platform and click on the ‘Earn’ option located at the top of the page. After that go down to find ‘Liquidity Farming’ and click on it to continue.
Step 2: Find The WBTC Liquidity Pool
Navigate to the Liquidity Farming page and then find the particular WBTC pair you are interested in, for example, WBTC/ETH.
Step 3: Add Liquidity
Select the ‘Add’ option in the operation column for the WBTC/ETH liquidity pool. You are to input the value of the WBTC you want to stake, check the projected returns, and then click on the ‘Add liquidity’ button to proceed.
Stake Wrapped BTC in a DeFi Protocol
Alternatively, WBTC can be staked in a DeFi application such as Curve.fi, whereby users can trade ERC-20 tokens through an order book of liquidity pools.
Step 1: Deposit WBTC on Curve.fi
Visit Curve. fi and go down to the liquidity pool tab. Stake your WBTC in a Curve contract and it will be combined with other tokens.
Step 2: Receive LP Tokens
The deposit you will make will be exchanged for liquidity provider (LP) tokens that will represent your stake in the pool.
Step 3: Stake LP Tokens
Deposit your LP tokens in the Curve platform to get paid on your WBTC investments. This yield is obtained from the trading commission as well as the interest earned on the liquidity pool.
Either way, you can make staking on your WBTC with Binance prov
Popular video guides on Staking Wrapped Bitcoin (WBTC)
Best Places to Stake Shiba (SHIBA)
KuCoin is one of the largest crypto exchanges that provides trading, staking, and lending services. Some of the qualities include a user-friendly interface, different coins, and acceptable fees. It has great security and an enhanced trading platform; however, it has issues with regulation, slow support, and limited fiat currencies.
Pros:
- A wide range of cryptocurrencies is available
- Advanced trading features and tools
- Competitive trading fees
- Strong security measures
Cons:
- Regulatory issues in some regions
- Customer support can be slow
- Limited fiat currency options
Cake DeFi provides staking, lending, and liquidity mining services with rewards in DFI tokens. It also means that users can earn from swap fees and lending cryptocurrencies such as Bitcoin and Ether. Although it offers high-return investments, it offers no borrowing facility and it is limited to only a few types of assets. Cake Defi allows you to earn up to 4% of the Annual Percentage Yield on Wrapped Bitcoin, or WBTC.
Pros:
- High yields on staking and liquidity mining
- Diverse earning opportunities
- Native DFI token rewards
Cons:
- No borrowing option
- Limited lending cryptocurrencies
- High APR claims may seem unrealistic
ZenGo is an all-in-one cryptocurrency wallet for iOS and Android that allows you to buy crypto, stake, and swap. It supports many cryptocurrency blockchains like Bitcoin & Ethereum, with a 3% APY for staking-wrapped Bitcoin (WBTC). It’s user-friendly but mobile-only.
Pros:
- Multi-functional wallet features
- Supports various cryptocurrencies and blockchains
- Staking options with competitive APY
Cons:
- Limited to mobile platforms
- May have higher fees for some transactions
- Support for fewer niche tokens
Benefits of Staking Wrapped Bitcoin (WBTC)
Many advantages come with staking-wrapped Bitcoin (WBTC), which can help to improve your investment plan. Through staking your WBTC, you will be able to have more stability, earn passive income as well as open up the door to more financial opportunities. Here’s a closer look at the advantages:
Volatility Protection
Staking WBTC also makes it possible to insulate your assets against the general short-term fluctuations witnessed in the crypto market. By staking your WBTC, you lock it for a certain period to avoid it being influenced by the high volatility thus enabling you to benefit from more extended periods of growth.
Passive Income Generation
Staking WBTC makes it possible for people to earn more income by contributing towards the security of the network and validation. WBTC tokens are received as rewards in the form of newly created tokens, and thus provide a stable source of income without the necessity of constantly buying and selling.
Liquidity and Accessibility
WBTC gets benefits from being integrated into the Ethereum ecosystem which makes it more liquid and easily accessible. It enables investors to interact with the DeFi protocols, lending platforms, and dEXs, opening new possibilities that were available only to Ethereum-based tokens.
Frequently Asked Questions
How are Wrapped Bitcoin Tokens Used?
WBTC is an ERC-20 token that acts as an intermediary between the Bitcoin and Ethereum networks. As an ERC-20 token, WBTC allows Bitcoin to be used in Ethereum-based products, and for Bitcoin holders to participate in DeFi. This tokenisation enables WBTC to be utilised as collateral in obtaining loans within DeFi platforms and improves liquidity by integrating Bitcoin’s large market capitalisation into Ethereum’s ecosystem. Also, it makes the support of various cryptocurrencies in exchanges and wallets more unified and provided in the same blockchain.
Can You Mine Wrapped Bitcoin Token?
No, you can not mine Wrapped Bitcoin (WBTC). WBTC is an ERC-20 token built on the Ethereum blockchain through the process known as wrapping Bitcoin. It is acquired by the minting and redemption process where Bitcoin is turned into WBTC with the help of custodians, rather than mining.
How Can You Buy Wrapped Bitcoin Token?
To buy Wrapped Bitcoin (WBTC):
- Select an Exchange – Go to a platform where WBTC is available for trading and sign up.
- Set Up Payment – Connect your payment option to the exchange account.
- Buy – Search for WBTC in assets and then buy it.
Is Wrapped Bitcoin Safe?
Decentralised Wrapped Bitcoin (WBTC) is as secure as centralised bitcoin, but the level of security is up to your tolerance level. About cryptocurrency markets, it is important to note that they are highly active and therefore highly unpredictable; sometimes their price can go up or down in a short period. Therefore, investors need to ensure that they conduct their research on the market and the different risks that may be associated with WBTC.
