Wrapped Bitcoin supply drops to negative after 11,500 wBTC burn linked to Celsius

cointelegraph.com:

The supply of wrapped Bitcoin (wBTC) dropped to its lowest since May 2021 after the second-largest single-day burn on Feb. 27. 

A total of 11,500 WBTC worth about $260 million linked to now-bankrupt crypto lender Celsius was burned, turning its growth rate to negative. The current total supply of the wrapped token is 164,396 WBTC, with a monthly growth rate of -7.39.

WBTC is an Ethereum-based ERC-20 token that mirrors the value of Bitcoin and is pegged 1:1 with the Bitcoin (BTC) price. Bitgo co-developed wBTC in 2019 alongside blockchain interoperability protocol Ren and multi-chain liquidity platform Kyber. wBTC is also managed by the decentralized autonomous organization wBTC DAO, which comprises over 30 members.

When a merchant wants to exchange BTC for wBTC, they start a burn transaction and alert the custodians. The custodians then send the matching amount of BTC to the merchant's bitcoin address. Users can then exchange their wBTC for BTC at merchants, who burn the received tokens.

Being an ERC-20 token makes the transfer of wBTC faster than normal Bitcoin, but the key advantage of wBTC is its integration into the world of Ethereum wallets, decentralized apps and smart contracts.

During the peak of the bull run, wrapped tokens became a popular tool of use in the DeFi ecosystem. wBTC's supply peaked at 285,000 in April 2022 when the BTC price was trading above $48,000.

However, with the advent of the bear market and numerous crypto contagions, the demand started to fade away. The first signs of lowering demand came after the Terra-LUNA-led crypto contagion that forced several crypto lenders to redeem their wBTC. According to one report, Celsius Network redeemed about 9,000 wBTC amid a growing withdrawal demand.

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