Different blockchains use different protocols and are often technically incompatible for this reason. The problem of interoperability is solved by wrapped tokens, which are designed to transfer liquid assets from one network to another. One of the most famous and widespread wrapped assets is Wrapped Bitcoin (WBTC).

What are wrapped cryptocurrencies

The concept of wrapped cryptocurrencies echoes the concept of stablecoins. The value of a token issued on a third-party blockchain is pegged to the underlying asset at a 1:1 ratio, just like the value of USDT or USDC is pegged to the US dollar. Accordingly, the exchange rate of stablecoins pegged to one asset, for example BUSD to USDT, normally almost does not deviate from parity.

Wrapped cryptocurrencies represent a compromise solution. They open access to DeFi applications, promote the liquidity of cryptocurrency and stimulate its distribution.

WBTC helps to overcome the technical incompatibility of the Bitcoin network with Ethereum and makes it possible to use the functionality and advantages of both blockchains. WBTC is an ERC-20 token with a price of 1 BTC. However, this token can be used in the DApps system on the Ethereum blockchain.

In addition to assets wrapped for the Ethereum blockchain, there are tokenized versions for other networks, such as BEP-20 wrapped tokens for use in Binance Smart Chain. Moreover, in addition to WBTC, there is another wrapped version of Bitcoin that is compatible with the Ethereum blockchain - Huobi BTC (HBTC).

Benefits of Wrapped Bitcoin

Entering the DeFi ecosystem opens up opportunities for BTC users that were previously inaccessible. Let's look at them in more detail.

Liquidity

Wrapped Bitcoin boosts liquidity on both decentralized (DEX) and centralized exchanges (CEX). Plays a major role in centralized markets. DEX is based on the Ethereum blockchain and other networks. WBTC eliminates the need to exchange BTC for ETH and users can seamlessly move assets across networks, without losing to exchange rate fluctuations.

Staking

Staking is one of the most famous and popular features of DeFi that is not available for Bitcoin. Unlike the underlying asset, WBTC can be staked and receive additional income.

Profitable farming

Farming is another way to get additional income from long-term investment. It resembles staking, but is based on a different protocol. Coins can be blocked for shorter periods, and in addition, coins can be loaned at interest.

Additional functionality

WBTC is compatible with smart contracts. They eliminate the need for intermediaries, increase the speed, profitability and security of transactions, and reduce the risk of errors.

Where to buy and sell WBTC

WBTC is available for purchase on many top centralized and decentralized exchanges, including Uniswap, Binance, Kraken, Gate.io and many more. However, the number of trading pairs with this asset on CEX is several times less compared to the underlying asset. Therefore, to exchange WBTC for many altcoins, one has to look for additional ways.

The most affordable and easiest way to swap WBTC to AVAX and more than 2500 coins and tokens is to use the LetsExchange service. It's really simple, fast and as safe as possible. You do not need to create an account to perform a swap. Your task is to carefully fill in the exchange widget, which is located on the page that opens:

• In the upper field, enter or select WBTC for sale and indicate the amount of the transaction.

• In the bottom field, select AVAX or another coin to buy.

• Specify the wallet address for crediting the purchased coins.

• Make a deposit.

• Press the "Exchange" button.

The Smart Search system automatically searches for the most profitable current deals with the conditions that suit you. After confirming the application, the transaction is completed and the coins are credited to your wallet. The execution time of the application depends on the workload of the blockchain networks. The LetsExchange platform does not collect any information about clients and all transactions are performed anonymously without any restrictions.