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Wrapped Bitcoin Meaning

Wrapped Bitcoin (WBTC) is a tokenised version of Bitcoin created as an ERC‑20 token on the Ethereum blockchain. Each WBTC is backed one-to-one by Bitcoin held in custody by a consortium of custodians and merchants.

WBTC allows holders to use their BTC in Ethereum-based decentralised applications such as lending protocols, decentralised exchanges, and yield aggregators. The wrapping process involves depositing BTC with a custodian, which then mints the corresponding WBTC on Ethereum.

Users can later redeem WBTC for BTC by sending tokens back to the custodian for burning and withdrawal.

Wrapped assets like WBTC increase liquidity across chains but introduce custodial risk and rely on the trustworthiness of the custodial model.

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