DeFi protocol Compound is adding wrapped bitcoin to its offerings after its users "overwhelmingly" voted to add the token, according to the company.
Wrapped bitcoin is essentially an ERC20 token that's pegged 1:1 with bitcoin. The token has been deployed on the Compound protocol, according to the company, allowing users to borrow and earn interest on it.
Robert Leshner, CEO of Compound, said WBTC represents a great first step to integrate bitcoin into the ethereum ecosystem, but there are concerns that the coin is centralized as the bitcoins backing it are custodied by custodial services like BitGo. WBTC is the best ethereum has to offer in terms of bitcoin usage as of now, according to Leshner, and there aren't yet comparable alternatives.
"For the most part, WBTC is the best that DeFi has right now," he said.
For its part, Compound said it held off on launching WBTC until the ecosystem matured. What convinced the company that it was a viable token, according to Leshner, was the large WBTC pool created on Uniswap.
As for its integration on Compound, the market uses the same interest rate model as ETH, BAT, ZRX, and REP, and the initial exchange rate is 0.0200. Initially, users won't be able to use it as collateral to borrow against, as an early market precaution.