Wrapped Bitcoin on Monad: using BTC in Monad DeFi

Why bring Bitcoin to Monad

Bitcoin is the largest crypto asset, but the Bitcoin network has limited programmability. Wrapped BTC on Monad lets BTC holders trade on fast DEXs, borrow against their BTC, and earn yield in Monad DeFi without selling their Bitcoin exposure.

How wrapped BTC is backed

Custodial wrapping: a company holds real BTC and issues tokens representing it. This is simple but requires trusting the custodian. Bridge-based wrapping: BTC is locked via a cross-chain bridge and a representation is minted on Monad. Security depends on the bridge's design.

Before holding any wrapped BTC, find out who or what holds the backing, whether reserves are publicly verifiable, and what happens if the issuer or bridge fails.

Using wrapped BTC on Monad

Trading: swap wrapped BTC against WMON or stablecoins on Monad DEXs with sub-second confirmation. Lending: supply wrapped BTC to money markets to earn interest, or use it as collateral to borrow stablecoins. Liquidity: provide wrapped BTC to pools and earn trading fees.

Monad's low fees make strategies practical that would be too expensive on slower chains, like rebalancing collateral or compounding rewards frequently.

The risks to understand

Wrapped BTC adds layers of risk on top of Bitcoin itself: custodian risk, bridge risk, smart contract risk and depeg risk. If the backing mechanism fails, the wrapped token can lose value even if Bitcoin's price is fine.

Size your position accordingly, diversify across issuers if you hold large amounts, and prefer wrapped BTC with deep liquidity and a strong track record.