Following a huge burn of 11,500 wBTC, the supply of Wrapped Bitcoin (wBTC) has decreased to a negative value. Celsius, a decentralised financial company that provides cryptocurrency lending and borrowing services, was linked to the burn. Celsius carried out the burn as part of its ongoing attempts to decrease the supply of wBTC and boost its scarcity thus increasing its value.
The team destroyed 11,500 wBTC tokens by sending them to an address with no private key, essentially removing them from circulation. Meanwhile, the total supply of wBTC is above 164,000, with a monthly growth rate of around -7.39%.
Wrapped Bitcoin is an ERC-20 (Ethereum) token that tries to replicate the value and price of BTC. Major developers like Bitgo, Ren (a blockchain interoperability protocol), and Kyber, a multichain liquidity platform, launched the token in 2018. With roughly 30 members, the decentralised autonomous organisation (wBTC DAO) commits to monitoring and overseeing token transactions.
Exchanging BTC for Wrapped Bitcoin normally begins with a burn transaction and informing custodians, as per merchants. The merchants identify and send actual tokens to a locked BTC blockchain custodian address. When actual Bitcoin arrives at the address, it mints the token, elevating it to the level of the Ethereum network’s wBTC.
The decreased supply of wBTC will raise its value and appeal to investors and traders looking for a rare asset with a good use case. If this action proves successful, the team may continue to burn wBTC tokens in the following months. This will be part of their attempts to increase the token’s scarcity and maintain the long-term worth of their customers’ investments.
This burn is a good thing for the crypto industry as a whole. The wBTC burn will most likely have a long-term influence on the token’s value and demand. It remains to be seen, however, how other decentralised banking services will react to the burn and whether or not they will join the attempt to limit Wrapped Bitcoin supply. The platform has also announced that it would partner with other decentralised financial platforms in order to urge them to join the effort to lower wBTC supply and enhance its value.
