Ethereum Classic wants to play within the decentralized finance [DeFi] space of the blockchain it contentiously split from in 2016.
Announced Wednesday, Ethereum Classic Labs, the ETC blockchain’s biggest supporter, released Wrapped ETC (WETC) – an ERC-20 token that lets ETC holders participate in Ethereum-based DeFi services like trading, lending, and borrowing.
“We wanted to form sure ETC could attend a special ecosystem and use different applications on top of that ecosystem,” said James Wo, founder, and chairman of ETC Labs. “I expect a minimum of 10% of ETC holders will want to participate and use WETC.”
Wrapping is the act of taking a blockchain asset like bitcoin and issuing the same representation on another blockchain like Ethereum. Wrapped Bitcoin (WBTC), as an example, is an ERC-20 token that’s backed on a 1:1 basis with bitcoin held in reserve by qualified custodian BitGo Trust. More recently, Zcash announced a wrapped, DeFi-ready version of the privacy coin.
Wo of ETC Labs acknowledged that WBTC tokens are backed and guaranteed by BitGo, a centralized entity. “What we’ve done here is use a sensible contract so people can easily exchange ETC for WETC employing a smart contract which is completely decentralized,” he said.
This is similarly the case for tBTC from Thesis and renBTC from Ren.
WETC is often transferred or stored in any ERC-20-compatible wallet or storage mechanism, said Wo. Under the hood, ChainBridge, a decentralized application that interfaces with both the Ethereum Classic blockchain and therefore the Ethereum mainnet, allows ETC tokens to be transferred to the Ethereum mainnet via the bridge. Then a specified amount of ETC is locked during a smart contract and a corresponding amount of WETC is minted on Ethereum.
The release of WETC follows the launch of a DAI-ETC bridge, said Wo, which enables ETC users to realize access to MakerDAO’s dai, a well-liked stablecoin in DeFi.