WBTC is backed 1:1 with the BTC ERC-20 token. Wrapped Bitcoin links the Bitcoin and Ethereum blockchains. This allows BTC holders to interact with decentralized applications on the Ethereum network. The ERC-20 standard makes it work with most of the DeFi ecosystem. Confirmation of Wrapped Bitcoin reserves is published on the Bitcoin blockchain, broken down by custodian addresses where the crypto asset is stored.
WBTC was launched in 2019. There are four types of users in the ecosystem: custodians, merchants, DAO members, and the users themselves. Custodians support the token, while merchants burn WBTC during the conversion back to BTC.
An autonomous organization was also launched, in the ranks of Blockfolio, Compound, and MakerDAO. The DAO was established to allow participants to agree on changes to the WBTC structure before implementation.