In March 2024, Bitcoin and Ethereum have reached their highest valuations in years, exerting substantial influence over the cryptocurrency market. Bitcoin currently commands a 51.9% market dominance, while Ethereum holds 17%. Notably, derivative tokens linked to these two pivotal cryptocurrencies have gained significant popularity, with STETH and WBTC emerging as prominent players, ranking within the top 20 of the crypto economy’s market capitalizations.
The Rise of Derivative Tokens Tied to Bitcoin and Ethereum
Wrapped, synthetic, derivative, or bridged tokens have witnessed a remarkable surge in importance in recent years. An early example, wrapped bitcoin (WBTC), made its debut in 2019. With a circulating supply of 155,434 WBTC, it currently holds the 17th largest market capitalization in the cryptocurrency landscape.
WBTC, representing the most significant wrapped version of BTC, is joined by numerous other bitcoin derivative tokens, each pegged on a 1:1 basis with BTC. For instance, Bitcoin Bep2 (BTCB), launched on the BNB Chain, boasts a circulating supply of 54,011 BTCB, ranking 205th in the cryptocurrency market. The Avalanche blockchain hosts 3,747.32 BTCb, held by 241,137 holders.
Beyond these, derivative tokens with smaller market capitalizations tied to BTC, such as SBTC and BBTC, exist. Ethereum-related derivative tokens also wield considerable influence, with Lido’s staked ether (STETH) leading the pack. Currently valued at $35.78 billion, STETH ranks as the sixth-largest among the top ten cryptocurrencies, commanding a 70.89% share of the liquid-staking ethereum derivatives market.
While STETH dominates, other options like Rocket Pool’s liquid staking protocol secure $4.14 billion with 1.13 million ethereum underpinning its RETH token, making RETH the 58th largest market cap presently. Combined, STETH and RETH account for 9.78 million ETH, with an additional 2.89 million ETH invested in 25 different ether derivative token protocols. Collectively, tokens across all 27 liquid staking derivative protocols represent 1.88% of the cryptocurrency economy’s total value of $2.7 trillion.
