Decentralized finance -- or DeFi -- is a term for financial services delivered through decentralized technology, particularly blockchains. Many in business and technology have identified middlemen such as banks and ratings agencies as weak points in financial systems. DeFi aims to eliminate the problem of middlemen by delivering financial services -- such as collateralized loans, dividends, and equity in various assets -- through decentralized smart contracts that are efficient, transparent, and widely accessible.
Approximately $850 million is currently deployed across all DeFi projects, a number that has grown by 137% in the past year. Ethereum, which is currently home to over 200 operational DeFi projects, has emerged as a leading foundation for DeFi applications.
But while Ethereum is popular as a home for DeFi, roughly two thirds of the world’s total cryptoasset market value is currently held in Bitcoin. The result is that the majority of blockchain wealth is unable to participate in many DeFi projects.
tBTC bridges this gap, letting people use their BTC to participate in DeFi platforms on Ethereum. Users deposit BTC and mint TBTC, an ERC-20 token backed 1:1 by Bitcoin. They can then use TBTC to participate in projects including Maker DAO and Compound, which represent a majority of the world’s DeFi ecosystem.