Wrapped Coin Analysis

A wrapped asset is a cryptocurrency token that is pegged to the value of another, native version of that token. Being pegged simply means that the value should always remain equal to that of the original asset. Bitcoin has multiple different wrapped versions, the breakdown of which can be shown using data from Nansen:

Different Kinds of Wrapped Bitcoin

Nansen.ai: 02/02/2022 – Breakdown of Wrapped Bitcoin

• The largest is known as wBTC or Wrapped Bitcoin and is worth +$10bn.
• Bitcoin itself cannot be used on Ethereum’s ecosystem however wBTC conforms with the technological standards (ERC-20) and therefore can be used.
• Each wBTC is backed by Bitcoin itself in a 1:1 ratio. Each Bitcoin is stored by a centralized entity (such as BitGo) with the key risk of holding wBTC being the security of the wallets where that Bitcoin is held.

How can you Profit from Wrapped Assets?

Because the wrapped asset (in our case, wBTC) can be used on Ethereum, we are able to take advantage of DeFi and find high yielding opportunities. Nansen allows us to identify the largest holders of wBTC and can be used to identify some of the top opportunities to earn yield:

Notable wallets

Nansen.ai: 02/02/2022 – Largest Holders of wBTC on Ethereum and Change Over 7 Days

• The top 3 all provide yield opportunities: Maker DAO, Compound and AAVE.
• The bottom 3 are all bridges to other smart contract networks. This shows that there are large amounts of wBTC being moved to different chains to optimize profits.
• Whilst Avalanche is currently receiving a net inflow, interestingly Fantom is seeing a reduction of wBTC in their ecosystem.

✅ Tip: To see the hottest opportunities right now, we can sort the table by change – showing exactly what protocols wBTC is flowing into at this very moment.

Conclusion

Wrapped assets play an important role in the ability to use native assets such as Bitcoin across the crypto ecosystem. Understanding how these works will grant you access to opportunities across multiple ecosystems across the space. Increasingly we find projects targeting a multichain future:

• Vlaunch. The first fully influencer backed multi-chain launchpad includes some of the most prominent individuals in crypto.
• Multichain. The cross-chain infrastructure recently concluded a $60m financing round led by Binance Labs.
• Blockchain Monster Hunt. A cross-chain GameFi project set to disrupt the NFT market.

Using Nansen will allow you to find the very best opportunities for profit.