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In the letter
- Anchorage, a cryptocurrency custodian services provider, has partnered with Tokensoft to bring wrapped Filecoin to DeFi markets.
- Wrapped Filecoin uses third-party custodians to create 1: 1 replicas of Filecoin’s native FIL token on other blockchains, such as Ethereum.
- Filecoin is also working with other cross-chain wrapping services, such as Ren, to bring FIL tokens to a wider audience.
Filecoin, which has become one of the the largest decentralized storage projects on the market after launch in October, is getting a boost from cryptocurrency custody provider Anchorage to access liquidity from the DeFi sector.
Anchorage yesterday announced the release of Wrapped Filecoin (wFIL) in partnership with Tokensoft and investment firm CMS Holdings. Filecoin wrapped, part of Wrapped up program designed to bring cross-chain resources into Ethereum blockchain, could bring much-needed liquidity to the nascent Filecoin storage market, helping DeFi protocols generate returns for users.
DeFi, short for decentralized finance, is a group of protocols designed to provide financial services like those of traditional banks without relying on centralized infrastructure.
Wrapped cross-chain tokens have become an important part of the DeFi mix. Solutions like Bitcoin wrapped helped bring more than $ 2.3 billion in value to the DeFi ecosystem, according to data provider DeFi DeFi Pulse. Like wBTC, wFIL uses a custodian system to hold the underlying asset (in this case Filecoin native FIL tokens) and issues 1: 1 “wrapping” token versions on blockchain like Ethereum.
“Wrapped Filecoin will enable some truly creative DeFi products that create huge opportunities for Filecoin’s miners and storage users,” Colin Evran, Filecoin’s ecosystem manager, said in a press release. “We are seeing so much innovation every day from dozens of individuals and institutions interested in decentralized storage and we are excited to see what will happen once the DeFi talent pool can unite.”
Ethereum’s DeFi market offers large amounts of liquidity, or value in the form of tokens, which makes it easier for traders to find fair prices for assets or provide credit to invest in building new technology. That does attractive compatibility for Filecoin, which uses a separate market for pricing storage capacity for different use cases. Bridging the DeFi liquidity between Ethereum and Filecoin’s native market is expected to allow more traders to buy and sell wFIL tokens, leading to prices that more accurately reflect supply and demand for Filecoin storage capacity. In return, DeFi users could reap the rewards of Filecoin’s growth, which would otherwise have been out of reach on the Ethereum chain.
How previously reported of Decrypt, Filecoin is also pursuing cross-chain trading for FIL tokens in collaboration with Ren, who is designing a system of smart contracts maintain custody of native tokens without relying on third party custodians. But Ren, for the moment, is still moving towards decentralization itself: in August, Ren has taken heat to create Ren Bitcoin wallets, used to store Bitcoin related to Ren’s wrapped renBTC offering, accessible to members of the Ren development team.
You can access Wrapped Filecoin now decentralized exchange Uniswapand Anchorage and Tokensoft plan to add cross-chain functionality to additional native tokens in the coming months.
