The Great Migration - The Daily Gwei #56

Some notes on the recent uptick in BTC migrating to Ethereum.

BTC is migrating from Bitcoin to Ethereum at a rapid pace these days and it’s not hard to see why given how much yield is available on Ethereum for those who hold BTC. At time of writing, over $500 million (45,000+ BTC) has migrated to Ethereum with the majority of that movement happening over the last 3-4 months.


I wrote this in one of my previous pieces about DeFi sucking in liquidity:

“BTC on the Bitcoin network is what I like to call a “pet rock” as you can’t do much with it but if you bring it to Ethereum you get access to the entire DeFi suite. BTC is just one of many assets that Ethereum will suck into its gravity well over the coming years.”

I think this is even more relevant today as the opportunities to earn yield with your BTC on Ethereum have exploded. For example, you can currently earn 43%+ APY on Curve by putting your renBTC, WBTC or sBTC into either the ren or sbtc pools. If you don’t want to yield farm directly with your tokenized BTC, you can use it as collateral on platforms like Compound, Aave and Maker in order to borrow stablecoins to yield farm with. At this point, it doesn’t make economic sense to leave your BTC on Bitcoin unless you literally just want to buy and hold it forever (which is fine - but I prefer doing things with my assets). I’ve also written about how I think BTC migrating over to Ethereum is actually bearish for Bitcoin (in the very long run).

Though I do wonder why people aren’t just selling their BTC for ETH at this point since all of the tokenized versions of BTC on Ethereum are either centralized or have much lower security guarantees than ETH. I think the main reason is basically taxes because in many jurisdictions going from crypto to crypto is a taxable event and that’s just not something many people want to deal with (and I don’t blame them for this). But for new users entering the cryptosphere, I don’t see many reasons why they’d buy BTC at this point. It’s much easier to just buy ETH from an exchange like Coinbase and then send it out to a wallet like MetaMask - this gives you instant access to the world of DeFi.

While it’s interesting to watch other cryptoassets migrate to Ethereum, I’m personally not going to be dabbling in them too much. Even though I was using some WBTC to yield farm with on Ethereum for a little while, it got to a point where I just exchanged it for ETH because I’m obviously much more bullish on ETH than BTC and I’d rather not hold onto a centralized asset if I don’t have to (WBTC is mainly controlled by a single party).

As I always say, just use ETH.

Have a great weekend everyone,
Anthony Sassano

All information presented above is for educational purposes only and should not be taken as investment advice.

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