ERC-20 Bitcoin: How Bitcoin Lives on Ethereum
When working with ERC-20 Bitcoin, a group of tokens that lock up Bitcoin and issue an equivalent ERC-20 representation on the Ethereum network. Also known as Bitcoin‑backed ERC‑20 tokens, it bridges the world of Bitcoin’s store‑of‑value with Ethereum’s smart‑contract ecosystem. One of the most recognized examples is Wrapped Bitcoin (WBTC), a token that holds Bitcoin 1‑to‑1 and lets users trade it on decentralized exchanges, lend it in DeFi protocols, or use it as collateral. Another emerging player is SolvBTC, which adds a liquid‑staking layer so holders earn yield while keeping the Bitcoin peg. ERC-20 Bitcoin requires the Ethereum network to handle transactions, gas fees, and smart‑contract logic, meaning any wallet or dApp that supports ERC‑20 tokens can also manage Bitcoin‑derived assets. This connection creates three key relationships: ERC-20 Bitcoin encompasses Wrapped Bitcoin, it relies on the Ethereum blockchain, and DeFi platforms enable Bitcoin exposure through these tokens.
Core Concepts, Benefits, and Risks
Understanding how Bitcoin can be tokenized on Ethereum starts with the idea of custodial versus non‑custodial bridges. Custodial bridges, like the WBTC model, store the underlying Bitcoin in a centralized vault and issue ERC‑20 equivalents based on that reserve. Non‑custodial designs, such as SolvBTC’s proof‑of‑reserve mechanism, let users lock Bitcoin in smart contracts that automatically mint the ERC‑20 token, reducing trust risk. These tokenized forms let Bitcoin participate in yield farming, liquidity mining, and instant cross‑chain swaps that would be impossible on the Bitcoin chain alone. However, they also inherit Ethereum’s gas volatility and the smart‑contract audit risk. For traders, the ability to move Bitcoin‑value quickly between DeFi platforms can boost capital efficiency, but it also adds layers of protocol risk that must be managed with tools like multisig wallets and reserve proofs.
Below you’ll find a curated set of articles that dive deeper into each piece of the puzzle. We cover exchange reviews where ERC‑20 Bitcoin tokens are listed, detailed tokenomics for Wrapped Bitcoin and SolvBTC, guides on using these assets in DeFi, and risk‑management strategies for anyone looking to blend Bitcoin’s stability with Ethereum’s flexibility. Whether you’re new to tokenized Bitcoin or hunting for the latest yield‑optimizing tactics, the posts ahead give you practical steps, real‑world examples, and the latest market insights to help you navigate this fast‑moving space.
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Wrapped Bitcoin (WBTC) Explained: How It Works, Benefits & Risks
A clear guide to Wrapped Bitcoin (WBTC): how it works, benefits, risks, how to wrap/unwrap, and its role in DeFi, plus recent updates and future outlook.