The competition to gain a share of the wrapped bitcoin market is heating up.
Posted September 3, 2024 at 3:38 pm EST.
21.co, the parent company of 21Shares, has launched a new wrapped bitcoin token, 21BTC, on the Ethereum blockchain, following the earlier introduction of 21BTC on the Solana blockchain. The new Ethereum-based 21BTC aims to offer users a secure and institutionally backed alternative to existing wrapped bitcoin products like Wrapped Bitcoin (WBTC).
The launch comes at a critical time as WBTC has recently faced scrutiny and declining trust following changes in its custodial arrangements by BitGo. The involvement of controversial figures like TRON’s Justin Sun in the new custody structure has led to a sharp increase in WBTC redemptions, signaling a loss of confidence among investors. This backdrop of uncertainty presents an opportunity for 21.co to position 21BTC as a more secure and reliable option.
“As one of the world’s largest issuers of crypto ETPs, we bring stringent asset management best practices and our operational excellence to the world of wrapped assets, involving institutional-grade custodians and security protocols,” said Eliezer Ndinga, Head of Strategy and Business Development, Digital Assets at 21.co, in a statement read by Unchained.
However, 21shares is not alone. There are already several alternatives to WBTC, including tBTC, renBTC, and dlcBTC. Even Coinbase recently teased that they were launching a wrapped bitcoin product.
Moreover, 21.co’s wrapped bitcoin on Solana has not been a success, with a current supply of just 13.5 BTC, worth around $800,000 at current prices.
21.co’s 21BTC is designed with upgraded security protocols, leveraging cold storage for the underlying assets and avoiding more vulnerable “lock-and-mint” approaches. The company partnered with Flow Traders, a market maker, to ensure liquidity and market stability for the new token. Meanwhile, the mint and burn process is managed by 21.co’s Onyx OS.
The timing of 21BTC’s launch suggests that 21.co is trying to capitalize on the growing demand for alternatives to WBTC, in particular as prominent DeFi platform MakerDAO (now rebranded as Sky) passed a vote to disable future borrows against wrapped bitcoin.
Read more: Lending Protocol Aave to Propose Onboarding TBTC in Response to Concerns About Latest WBTC Custodial Changes
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