What Is Wrapped Bitcoin (WBTC) and its Uses in DeFi

Wrapped tokens have opened new possibilities for crypto users looking to expand beyond a single blockchain and interact with more applications.

Among these specific tokens, there is one that stands out above the rest due to the solutions it provides: Wrapped Bitcoin (WBTC).

In this article, I’ll cover what is wrapped Bitcoin, why it matters for decentralized finance (DeFi), how it works, and the key benefits for Bitcoin holders exploring the Ethereum blockchain.

At a glance: What is Wrapped Bitcoin?

Wrapped Bitcoin (WBTC) is a tokenized version of Bitcoin that allows users to use BTC on the Ethereum blockchain.

By turning Bitcoin into a wrapped token, holders can move their value into the Ethereum ecosystem without selling their original asset.

This allows them to join DeFi platforms, trade on decentralized exchanges, and interact with smart contracts.

WBTC is always backed 1:1 by Bitcoin, meaning every WBTC in circulation has a matching Bitcoin locked in reserve.

This blend of security and flexibility makes WBTC a bridge between two major networks, creating more ways to use Bitcoin beyond simple holding.

How do WBTC tokens work?

The wrapping process starts when a user wants to convert BTC to WBTC. First, Bitcoin is sent to a custodian, who safely holds it as the underlying asset. Then, an equivalent amount of WBTC is minted on the Ethereum blockchain.

These types of DeFi tokens are ERC-20 tokens and follow this standard, making them easy to use across DeFi platforms and apps.

If someone wants to go from WBTC to BTC, the process is reversed: the WBTC is burned, and the original Bitcoin is released.

This system makes Bitcoin more versatile, allowing it to work in a space it couldn’t reach before.

The DAO behind Wrapped Bitcoin

Wrapped Bitcoin (WBTC) is managed by a group of trusted crypto organizations that work together to keep everything secure and transparent.

This group is called the WBTC DAO, which stands for “decentralized autonomous organization.” In simple terms, it’s a system where no single company is in charge. Instead, multiple members share responsibility and make decisions as a team.

The WBTC DAO members include:

BitGo, the company that holds the Bitcoin backing every WBTC token.
Merchants like Kyber Network, CoinList, and AirSwap, who handle the conversion between BTC and WBTC.
Top DeFi projects like Aave, Compound, and MakerDAO, who help govern how the system works.

They use something called a multi-signature wallet, which requires at least 8 out of 13 members to approve any major change. This setup makes sure no one can act alone or make changes without agreement from the group.

Everything about WBTC is open and verifiable. Anyone can check the Bitcoin reserves that back each token, and every minting or burning event is recorded directly on the blockchain.

Governance decisions are also transparent, with all actions publicly visible and approved by the group.

This level of openness and shared control is one of the main reasons why WBTC has become so trusted in the DeFi ecosystem.

Wrapped Bitcoin alternatives across different blockchains

Wrapped Bitcoin isn’t limited to Ethereum. Several alternative tokens now let users move BTC into different blockchains, each with unique features and levels of decentralization.

cbBTC (Coinbase Wrapped Bitcoin)

Created by Coinbase, cbBTC works natively across Ethereum, Base, Solana, and Arbitrum. It offers simple integration with Coinbase Wallet and avoids third-party bridges, making it a beginner-friendly choice across multiple chains.

tBTC (Threshold Network)

tBTC runs on Ethereum and stands out for its decentralized approach, using a trustless network of signers instead of a central custodian.

The token is designed for users who want Bitcoin exposure without relying on traditional custodial models.

zBTC (Zeus Network)

Built for Solana, zBTC is a non-custodial, bridgeless option that brings native BTC liquidity into Solana’s DeFi ecosystem.

It’s part of a push to eliminate external bridges and give users direct access to Bitcoin on Solana.

BTCB (Binance-Peg BTC)

Issued by Binance on the BNB Chain, BTCB is backed by Bitcoin held in Binance’s reserves. It’s mainly used within Binance’s ecosystem and fits those who already trade or farm on BSC-based platforms.

STRC-20 WBTC (Wrapped BTC on Tron)

TRC-20 WBTC (Wrapped BTC on Tron)

CEWBTC (Celer-Wrapped WBTC)

The role of Wrapped Bitcoin in DeFi

Wrapped Bitcoin lets you do more with your BTC by putting it to work across DeFi platforms.

Instead of just holding Bitcoin, you can earn, borrow, and use it in new ways, all while keeping the value of your original asset.

These are some of the multiple things you can do with your WBTC tokens:

Use it as collateral to borrow crypto

One of the most popular ways to use WBTC is by locking it as collateral to borrow other crypto assets.

This is common on platforms like Aave, Compound, and JustLend. Basically, you deposit your WBTC and get stablecoins or other tokens in return, without having to sell your Bitcoin.

This gives you extra liquidity to use in other strategies while keeping your BTC exposure.

Earn passive income through liquidity pools

Another way to make use of WBTC is by adding it to liquidity pools. When you supply your tokens to platforms like Uniswap, Curve, or PancakeSwap, you earn a share of the trading fees every time someone swaps tokens in that pool.

You’ll also find wrapped BTC trading pairs on platforms like Jupiter and Raydium, where Solana-based tokens like cbBTC and zBTC can be used to earn fees while supporting fast and low-cost trades.

If you’re active on centralized platforms too, you can swap between BTC and WBTC through some of the best exchanges for day trading, depending on your strategy.

Boost returns with yield farming and staking

If you’re looking for higher rewards, you can use your wrapped BTC in yield farming and staking platforms.

Options like Kamino Finance, Yearn, and Beefy Finance offer vaults that automate compounding strategies, so you don’t need to manage them yourself.

For example, Kamino vaults using cbBTC on Solana can boost yields by combining multiple DeFi actions into a single automated strategy.

Meanwhile, Threshold’s tBTC lets users stake their BTC-backed tokens and earn additional rewards from the protocol.

Move BTC across different chains

Wrapped BTC tokens also help move Bitcoin liquidity across multiple blockchains. Through platforms like Celer Network, Wormhole, and LayerZero, tokens like WBTC, cbBTC, and zBTC can be used in DeFi protocols across Ethereum, Solana, Arbitrum, and other chains.

This makes it easy to explore faster or cheaper ecosystems without unwrapping and wrapping your BTC over and over again.

The benefits of wrapped crypto tokens

Wrapped tokens give crypto users more flexibility and new ways to use their assets across different blockchain networks. Here’s why they stand out:

Access to DeFi: Moving BTC to WBTC allows users to join the DeFi ecosystem, unlocking lending, borrowing, and yield farming without giving up their Bitcoin exposure.
Improved liquidity: Wrapped tokens help boost liquidity on decentralized exchanges and DeFi platforms, making it easier to trade and move large amounts of crypto assets.
Cross-chain utility: By turning Bitcoin into a wrapped token, it can be used on the Ethereum blockchain, connecting two of the largest networks without selling the original asset.
Enhanced functionality: WBTC holders can interact with smart contracts and decentralized applications in the Ethereum ecosystem, something not possible natively on the Bitcoin blockchain.
Security and transparency: Each WBTC is fully backed 1:1 by Bitcoin, and the wrapping process is designed to be transparent, with reserves publicly verifiable.

How to buy Wrapped Bitcoin

Buying Wrapped Bitcoin (WBTC) is the first step to unlocking new ways to use Bitcoin in DeFi, from lending and staking to exploring decentralized applications.

Here’s a simple step-by-step guide to get started:

Choose a trusted exchange
Pick a reliable platform that supports WBTC. Some popular options include the following top Ethereum exchanges :
- Best Wallet
- Coinbase
- Kraken
- Binance
- KuCoin
- MEXC
Deposit or buy Bitcoin

Add BTC to your exchange account. You can deposit Bitcoin you already own or purchase it directly with fiat currency.
Swap BTC to WBTC

Find the BTC to WBTC trading pair and complete the swap. This converts your Bitcoin into a wrapped token that can be used on the Ethereum network.
Transfer to your compatible WBTC wallet

After getting WBTC, move it to your preferred choice among the best ERC-20 wallets.

One of the top options is Best Wallet, because it allows you to buy the token, store it safely, and use it directly within DeFi apps. Check this Best Wallet review to get started. Other well-known alternatives include Trezor wallets, Ledger wallets, and Metamask.

It doesn’t matter if you choose hot wallets or cold wallets to store WBTC, In the end, any compatible Wrapped Bitcoin wallet is designed to keep your tokens safe and ready for DeFi use.
Start using WBTC

Once in your wallet, your WBTC is ready to be used in DeFi protocols, liquidity pools, or decentralized applications.

The present and future of Wrapped Bitcoin

Wrapped Bitcoin has evolved quickly, adding new features and integrations that make it more useful, more secure, and easier to move across blockchains.

In mid-2025, WBTC expanded to Aptos and other major chains like Avalanche, Tron, Base, BNB Chain, and Osmosis. This was made possible through LayerZero’s Omnichain Fungible Token (OFT) standard, which allows users to transfer WBTC between chains without needing to unwrap or rewrap it each time.

As the custodian behind WBTC, BitGo plans to bring the token to over 80 LayerZero-supported chains, unlocking deeper liquidity and better access to DeFi on nearly every network.

To support this multichain expansion, the WBTC DAO has removed all minting and burning fees for cross-chain merchants. This change reduces costs for platforms that handle BTC-WBTC conversions, encouraging more DeFi apps to integrate WBTC at scale.

Security is also being upgraded to match this growth. BitGo has launched a new custody strategy that spreads Bitcoin reserves across multiple countries, including Hong Kong and Singapore. This global model improves resilience and helps reduce the risk of relying on a single location for asset storage.

At the same time, more transparency is being added through the rollout of real-time proof-of-reserves. Using services like Chainlink, users will soon be able to verify on-chain that each WBTC token is fully backed by Bitcoin held in custody.

Looking forward, improvements in multi-signature wallets, vault security, and blockchain bridges are expected to make WBTC even more reliable as a core piece of the multichain DeFi infrastructure.

Conclusion

Wrapped Bitcoin gives Bitcoin holders new ways to use their coins beyond simply holding them.

In this article, you’ve learned what is wrapped crypto, how the wrapping process works, and why WBTC is so useful in the DeFi ecosystem.

By turning BTC into a wrapped token, users can access lending, staking, and decentralized applications on the Ethereum network while keeping the original value. This opens the door to a more flexible, rewarding, and connected way to experience the future of crypto.