Compound Users Can Now Earn Interest on Wrapped Bitcoin (WBTC) Tokens

Compound, a decentralized finance protocol that lets users loan and borrow several cryptocurrencies, has recently added wrapped bitcoin (WBTC) to its platform.

This means anyone with an Ethereum wallet can use the protocol to lend WBTC tokens and earn interest on them. As the tokens have only recently been added they can’t yet be used as collateral to borrow against.

Compound’s move reportedly came over “overwhelming” user demand after it asked users whether or not it should list the WBTC token. Wrapped Bitcoins are an ERC-20 token pegged 1:1 with bitcoin that was launched in January of this year.

According to its whitepaper users themselves can’t wrap their own BTC, and instead there’s a complex supply chain that sees big cryptocurrency names deliver the tokens. It adds that third parties are set to conduct quarterly audits of all WBTC to ensure a corresponding amount of BTC is stored by custodians.

Robert Leshner, Compound’s CEO, noted the token pegged to bitcoin represents a first step to integrate the flagship cryptocurrency into the Ethereum ecosystem, but that there are concerns regarding the token’s centralization, as the BTC used to back WBTC is custodied at services like BitGo.

Leshner further added that Compound didn’t launch WBTC until its ecosystem matured. The decentralized finance protocol uses for wrapped bitcoin the same interest rate model it uses on ETH, BAT; ZRX, and REP.

Currently users can lend and borrow Brave’s BAT, DAI, ZRX, USDC, WBTC, REP, and ETH through Compound’s app. Supplying annual percentage rates range between 0.02% for ETH to 12.6% for DAI. These rates change according to specific factors.