BTC
The original ERC-20 wrapped Bitcoin — the primary BTC collateral asset in Ethereum DeFi.
WBTC (Wrapped Bitcoin) is a 1:1 BTC-backed ERC-20 token issued by BitGo as the custodian and governed by the WBTC DAO of merchant partners who manage minting and redemption. Each WBTC is backed by one BTC held in BitGo's institutional custody, with on-chain proof-of-reserves published via Chainalysis. WBTC launched in 2019 and remains the dominant BTC representation in Ethereum DeFi, though its market share has gradually declined as competitors like cbBTC (Coinbase), tBTC (Threshold), and LBTC (Lombard) have emerged. In DeFi lending, WBTC is primarily used as overcollateral to borrow stablecoins (USDC, USDT), not as a borrowable asset itself.
- Approximately $2.5B in DeFi lending TVL across Ethereum markets as of early 2026 per DeFiLlama, with Aave V3 and Morpho as the primary venues.
- Custody is now held by the BitGo & BiT Global joint venture (announced August 2024), with BiT Global linked to Justin Sun — a change that triggered significant community concern and accelerated migration to cbBTC.
- Typical LTV on Aave V3 Ethereum for WBTC: ~70% LTV, 75% liquidation threshold — conservative relative to ETH-correlated assets because BTC is not correlated to ETH.
- WBTC's market share in BTCfi has eroded from near-monopoly to approximately 60–70% by mid-2026 as cbBTC, LBTC, and tBTC have gained ground (DeFiLlama BTCfi category).
- Sky (MakerDAO) accepted WBTC as collateral for minting DAI/USDS, providing an alternative borrowing venue to lending protocols for large BTC holders.
Frequently asked questions
What happened with the BitGo custodian change in 2024?
In August 2024, BitGo announced plans to move WBTC custody to a joint venture involving BiT Global, which was linked to Justin Sun. This raised centralization concerns among DeFi governance participants. Aave, MakerDAO, and several other protocols subsequently reduced or froze new WBTC collateral onboarding. The custody structure is verified on-chain via Chainalysis proof-of-reserves, but the organizational change introduced a new counterparty risk layer.
What is the main risk of using WBTC as DeFi collateral?
Custodian risk is the primary added risk beyond BTC price volatility: if BitGo becomes insolvent or the custodian loses access to the BTC reserves, WBTC redemptions could be halted or delayed. This is why tBTC (a decentralized alternative) and cbBTC (Coinbase-custodied) emerged as alternatives for users who want BTC exposure in DeFi with different custodian profiles.
Should I use WBTC or cbBTC for collateral in 2026?
cbBTC has deeper integration with Base and Morpho's Coinbase Loans product, and Coinbase's regulated custody is familiar to institutional users. WBTC has broader protocol coverage across Ethereum DeFi, including older integrations, and is accepted on more markets. For large positions, the custodian risk profile differs: Coinbase (publicly traded, NYSE-listed) vs. BitGo (private, with the 2024 joint-venture concerns). Choice depends on which chain you're on and which custodian relationship you prefer.