- Wrapped ETC allows Ethereum Classic DeFi users to join the Ethereum blockchain.
- Ethereum Classic users now have better access to the growing DeFi decentralized financial market.
- Activity and interest in the DeFi market have increased rapidly since June.
This is not a bridge to nowhere.
Ethereum Classic users now have the opportunity to build a new bridge to the $ 13 billion DeFimarket with the introduction of Wrapped Ethereum Classic Token (WETC).
ETC users who were previously unable to access all of the financial services available to ETH users can now use their ETC stakes to gain access to the world of decentralized finance, which is currently predominantly Ethereum.
The start of WETC is intended to provide another entry point into the rapidly growing DeFi area. Users who hold WETC can also take advantage of the ability to do business with WETC on decentralized exchanges and credit platforms and sell them to borrow assets or borrow using WETC as collateral, said James Wo, Founder and CEO of ETC Labs Decrypt.
Decentralized finance (DeFi) is a broad term for the diverse world of cryptocurrency and blockchain financial applications without intermediaries. Instead of relying on financiers – brokers, stock exchanges or banks – DeFi uses blockchains to build smart contracts between parties.
The packaged ETC start occurs at a point in time when the total value locked in DeFi is growing rapidly. Just a few months ago, the total value set in DeFi was less than $ 7 billion. Now it’s almost twice that.
The packaged token will be converted by Ethereum Classic into an Ethereum-compliant ERC-20 version of the token, which is listed on exchanges like Uniswap itself, as noted by Wo. ETC users who turn to WETC can access all Ethereum protocols, including smart contracts and decentralized apps (dapps) on the blockchain.
“Basically, it is a bridge for all ETC token holders to use various services in addition to ensure that their tokens are more valuable,” said Wo. “It’s actually about improving the efficiency of the products by improving the overall value of the tokens.”
Wrapped tokens, the digital assets tied to the cryptocurrency they represent, are hosted on the Ethereum blockchain. The price is the same as the underlying asset, even if it is not on the same or a blockchain.
Ethereum blockchain users can transfer from ETC tokens to packaged tokens via the decentralized application Chainbridge, which is connected to both the Ethereum blockchain and Ethereum. When transfers are made from the bridge, an amount of ETC is locked in a smart contract and the same amount of WETC is then minted onto Ethereum. Users can also convert their tokens back to ETC via the ETC bridge from WETC. WETC tokens are then destroyed, with the same amount of ETC being unlocked in the Ethereum Classic chain.
Ethereum Classic is the original version of Ethereum before the DAO hack that drained users’ values. Ethereum Classic then deviates from the Ethereum blockchain after changing the rules of the protocol, known as the hard fork in 2016. After the hack and hard fork, Ethereum users have– –less than today– –agreed to a one-time fork of the protocol to return the hack funds, but the entire community was not on board.
The holdouts believed that forking to return hacked funds would violate the core principle of unchanged cryptocurrency blockchains and were against forking to return the funds. These users still maintain the original Ethereum blockchain to this day and form the contemporary Ethereum community.
Since the two separated, there has been a natural tension between the camps. Ethereum Classic Labs created Wrapped ETC to connect the two. Earlier, ETC Labs had made a similar gesture when it was announced that DAI stablecoins would be added to the Ethereum Classic blockchain via Chainsafe late last month. Dai is a critical lubricant for the MakerDAO loan system. When a loan is made, Dai is minted, and it is the currency that users borrow and repay.
Interest and activity in relation to packaged tokens has increased since June, as evidenced by the number and awareness of the packaged tokens now available. Have multiple tokens, including Bitcoin – the largest with $ 2 billion synthetic BTC tokenized on Ethereum Packaged versions launched in the past few months. Wrapped BTC, currently the most popular synthetic bitcoin option on Ethereum, launched in early 2019.
The active user base of Ethereum Classic is estimated at 120,000 based on the active number of community members worldwide, a spokesman said.
“We have 10% of ETC locked in the product,” said Wo. “We believe this will likely add another 10-15% of the total ETC to WETC, and that amount will definitely add value to the price of Ethereum Classic.”
Additionally, Wo hopes the introduction of WETC will add value to Ethereum Classic through the growth of Ethereum’s entire blockchain ecosystem, he said.