Cardano had a blast during the bull market in 2021 and most of the time the rally was driven by news on Cardano’s development. After the bear market set in one year later, it became quiet around Cardano. Nevertheless, its ecosystem is thriving, and different teams are building all kinds of decentralized applications on top of Cardano’s blockchain. Last weekend a new protocol was started on the testnet and presents yet another exciting use case.

What is anetaBTC and what options are presented to investors when wrapping their Bitcoins?

cBTC is an important addition

The protocol anetaBTC is not only open-source but also covers an important niche. It allows wrapping Bitcoin which means that BTC is effectively tokenized on the Cardano blockchain. The biggest wrapper on the market is wBTC on Ethereum with a market cap of $4.2 billion at the time of writing.

Creating cBTC on Cardano works in a very similar way. Investors pay Bitcoin to anetaBTC and in return, they receive cBTC in their Cardano wallets. After tokenizing Bitcoin there are a variety of options available to investors such as lending cBTC or providing liquidity. Depending on the dApp, there is a yield that can be earned.

It is important to understand that tokenizing Bitcoin comes with a lot of risks. Not only is the software still in an experimental status. Holding Bitcoin is something completely different than holding an asset that represents the underlying value. The upside of taking the risks is that holding on-chain BTC yields no interest while holding and using a wrapper does.

Cardano’s ecosystem is thriving

cBTC is not released on mainnet yet, but it is still an important addition in the making. Cardano’s DeFi ecosystem is growing slowly but steadily. According to the platform DefiLama, Cardano has a TVL of over $152 million at the time of writing.

Of course, there is a lot of room when looking at the top protocols such as Ethereum, BNB Chain, Tron, Avalanche, and even Solana. While Cardano has been late to build its DeFi ecosystem, there is still a lot of commitment despite the head start of other blockchains that offer financial products as decentralized applications.

It remains to be seen if Cardano and its community will have the endurance to push through the bear market and establish a foothold. Once the tide is turning there could be a great reward waiting for those who stayed in the game and kept building no matter the market conditions they were in.