How to Stake (Wrapped) Bitcoin: A Beginner’s Guide

cryptonews.com:

The Bitcoin (BTC) network uses a proof-of-work (PoW) consensus protocol to secure the network, which means network participants can earn mining rewards (if they choose to mine the digital currency), but they can’t earn staking rewards natively. 

Fortunately, for BTC holders who would like to earn staking rewards on their bitcoin investment, you can tokenize your coins into Wrapped Bitcoin to earn staking rewards in the Ethereum (ETH)-based DeFi ecosystem. 

Read on to learn how to stake bitcoin (in tokenized form) and start earning staking rewards on your “digital gold.” 

Wrapped Bitcoin (WBTC) is a tokenized version of BTC on the Ethereum network. WBTC integrates BTC into Ethereum’s decentralized finance ecosystem by conforming to the ERC-20 standard. 

WBTC was launched in 2019 by BitGo, Kyber, and Ren and is currently the largest wrapped token by total market capitalization. 

WBTC allows Ethereum applications to integrate an ERC-20 token backed by real BTC reserves. In simple terms, you can wrap your BTC and lend the WBTC through DeFi lending protocols, use it as collateral for a crypto loan, or deposit it in an automated market maker (AMM) to earn liquidity mining rewards. 

WBTC is collateralized 1:1 with BTC through a transparently verifiable “proof of reserve” system. In other words, WBTC is pegged to the value of BTC in a ratio of 1:1 and, therefore, mirrors BTC’s price movements. 

Wrapped Bitcoin is managed by a decentralized autonomous organization (DAO) comprising several members who hold a multisig contract to add or remove WBTC merchants and custodians.

To deposit BTC and mint WBTC you must go through a process that involves merchants and custodians. Upon receiving a request from a user, the merchant initiates a