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In the letter
- Wrapped ETC will allow Ethereum Classic users to participate in DeFi on the Ethereum blockchain.
- Ethereum Classic users will now have greater access to the DeFi market of expanding decentralized finance.
- Activity and interest in the DeFi market have grown rapidly since June.
This is not a bridge to nowhere.
Ethereum Classic users will now have the option of a new $ 13 billion bridge to DeFimarket with the launch of Wrapped Ethereum Classic (WETC) tokens.
ETC users, who were previously unable to access the full range of non-custodial financial services available to ETH users, will now be able to stake their ETC holdings to enter the world of decentralized finance, which currently exists predominantly. on Ethereum.
The launch of WETC aims to provide another point of entry into the rapidly expanding DeFi space. Users who hold WETC can also take advantage of WETC transactions and sales on decentralized exchanges and lending platforms to borrow assets or create loans with 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. Rather than relying on financial intermediaries – brokers, exchanges or banks – DeFi uses blockchain to execute smart contracts between parties.
The roll-out of wrapped ETC comes at a time when the total value locked in DeFi is growing rapidly. Just a few months ago, the total value locked in DeFi was less than $ 7 billion. Now it is almost double.
The wrapped token will be converted from Ethereum Classic to an Ethereum-compatible ERC-20 version of the token, which self-lists on exchanges like Uniswap, Wo noted. ETC users who turn to WETC can access all Ethereum protocols, including smart contracts and decentralized apps (dapps) on the blockchain.
“Basically, it’s a bridge for all ETC token holders to use different services on top, to make sure their tokens are more valuable,” Wo said. “It’s actually about improving product efficiency by improving the entire value of the tokens.”
The wrapped tokens, the digital assets anchored 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 blockchain or on any blockchain.
Users of the Ethereum blockchain can transfer tokens wrapped in ETC tokens through the decentralized application Chainbridge, which interfaces with both the Ethereum blockchain and Ethereum. When transfers are made from the bridge, an amount of ETC is locked into a smart contract and the same amount of WETC is then minted on Ethereum. Users are also able to convert their tokens from WETC to ETC through the ETC bridge, and the WETC tokens are then destroyed, with the same amount of ETC unlocked on the Ethereum Classic chain.
Ethereum Classic is the original version of Ethereum, prior to DAO hacking, where user values were emptied. Ethereum Classic then diverged from the Ethereum blockchain following a change to the protocol rules, known as a hard fork in 2016. Following the hack and hard fork, Ethereum users–less than today–agreed to a one-time fork of protocol to return funds for the hack, but the entire community was not on board.
Resistances believed that the fork to return the hacked funds would violate the fundamental principle of unchanged cryptocurrency blockchains and were against the fork to return the funds. These users continue to maintain the original Ethereum blockchain today and understand the contemporary Ethereum community.
There has been a natural tension between the fields since the two separated. Ethereum Classic Labs created Wrapped ETC to link the two. Earlier, ETC Labs made a similar gesture when it announced that DAI stablecoins would be arriving on the Ethereum Classic blockchain via Chainsafe late last month. Dai is a key lubricant for the MakerDAO loan system. When a loan is granted, Dai is minted, and it is the currency that users borrow and repay.
Interest and activity in packaged tokens has increased since June, as evidenced by the number and prominence of packaged tokens now available. Several tokens, including Bitcoin, the largest with $ 2 billion of synthetic BTC tokenized on Ethereum, have launched packaged versions in the last months. BTC wrapped, currently the most popular option for synthetic Bitcoin on Ethereum, launched in early 2019.
Ethereum Classic’s active user base is estimated at 120,000, based on the active number of community members globally, a spokesperson explained.
“We have 10% of ETC stuck in the product,” Wo said. “We believe this will likely add another 10-15% of the total ETC to the WETC and that amount will certainly be valuable for the price of Ethereum Classic.”
Additionally, Wo hopes that the launch of WETC will increase the value of Ethereum Classic by growing the entire Ethereum blockchain ecosystem, he said.
