Research by Dune Analytics shows that almost $60 million worth of bitcoins was moved to Ethereum in the month of June. An Ethereum-based product, Wrapped Bitcoin, accounted for 75% of the growth after 4,800 BTC was moved to Ethereum.
In recent times, the appetite of the decentralized finance space for Bitcoin has increased. More people desire to use Bitcoin for different decentralized services. At the same time, Ethereum continues to gain momentum as the most popular off-chain destination for the apex cryptocurrency.
One of the most popular uses of Bitcoin in the decentralized finance space is in yield farming. Tokenized Bitcoin serves as a key component (collateral) in the practice of yield farming.
Broadly defined, yield farming is the process of generating returns from crypto assets by putting them to work. Yield farming involves the use of cryptocurrency assets to earn yield from protocols such as Compound, Synthetic, Balancer, and Curve.
In the early days of yield farming, users could participate in liquidity pulls where they invested their capital in order to gain returns.
According to Analyst at the Block, Matteo Leibowitz,
“I’m still surprised by the rate of growth in assets supplied…to me, that suggests more professionals participation, and is certainly a change from retail-dominated dynamic we’ve seen over the course of Open Finance’s brief history”
If Ethereum costs are cut, it could become more attractive as an investment. In 2019, global consulting firm Ernst & Young made progress with new blockchain technology to reduce Ethereum transaction costs by 90%. EY’s technology uses third-generation zero-knowledge proof (ZKP) technology which is based on cryptographic processes that allow private transactions on public blockchains.
According to a report by EY,
“Fast-emerging disruptive technologies such as blockchain and next generation iterations such as Ethereum are evolving rapidly and underpinning many aspects of innovation. Initially, these were created to orchestrate Bitcoin payment technologies via distributed secure ledger systems. With continued investments in development, they are now building industrial strength platforms1 using industry standards to cover the entire value chain from customer wallets and client driven applications to transaction and money exchanges.”