Many new traders have flooded into the cryptocurrency market in 2020 due to this summer’s DeFi boom and the following bitcoin bull run. However, if you are one of those newbies who want to gain from the bitcoin prosper, you may find yourself confused by the tokens that almost look the same: WBTC, sBTC, pBTC, renBTC… Are they all bitcoins? Yes. But what’s the difference?
In fact, these are the ERC20 tokens that represent BTC on the Ethereum network. They are much more scalable than the Bitcoin network, taking full advantage of the merits of Ethereum. The difference is that they are issued by different projects.
But which one is reliable? Before you draw a conclusion, you’ll have to take much time and effort in researching each of the tokens. Because all these ERC20 bitcoin tokens are issued by 3rd party service providers. These service providers can be centralized or decentralized, and both types could potentially lose their peg.
No need to do that if you invest in the ERC20 bitcoin index. A bitcoin index selects the most promising bitcoins and applies professional strategies, which will save your time by automated rebalancing, and reduce your missed opportunities with diverse investments. In other words, you can invest in bitcoin like a Pro.
Even the leading finance company S&P Dow Jones Indices has announced to launch its cryptocurrency indexes in 2021. Before that happens, let’s have a look at 2 products that can help you enlarge your interest like a pro.
The first one is PieDAO.
Its highest daily volume exceeded $100K on Nov 22.
The bitcoin index project in PieDAO is named BTC++. BTC++ is a tokenized representation of four of the leading BTC tokens on the market: imBTC, WBTC, pBTC, sBTC. So you can invest in bitcoin directly on Ethereum, with the advantages we mentioned above.
And there’s one more benefit of this “pie”. As these tokens are ERC20 tokens issued by third-party projects, there will be a potential risk to lose your BTC. This pie is focused on risk minimization, with a 25% allocation evenly distributing to each token for diversification.
When you mint BTC++, the contract will either purchases the underlying tokens from decentralized markets or uses available tokens in your wallet - if you already have any of the four tokens in your wallet, you can directly use them as part of this index. The funds are stored in PieDAO’s non-custodial treasury, meaning that every single BTC++ token is fully backed by reserves. You can buy BTC++ on the open market and redeem for the underlying tokens at any time.
The token is created using a Balancer pool which constantly automatically rebalances to maintain the desired allocation. This is done at no cost to holders of BTC++.
PieDAO also prepares various “pies” for you to invest in.
The DeFi+L contains all the DeFi blue chips, while the DeFi++ includes all types of DeFi tokens that have great potential to boom. The BCP refers to Balanced Crypto Pie, which consists of both BTC tokens and DeFi tokens, perfect if you have no idea which to invest in.
Besides index, we are going to introduce another way to invest in ERC20 “BTC” tokens with TokenSets, a new project by Set Protocol. The Set system has been audited by industry-leading auditing firms Open Zeppelin and ABDK, so it’s basically safe.
The set portfolios automatically rebalance your crypto using the strategy you choose. It reduces your emotional risk from actively trading by letting the portfolio strategies do the work for you.
This feature helps Set Protocol’s volume reached a new high. Today its volume hits $2.58M.
You can join the ETH WBTC Yield Farm, which is created by the Set official, to boost your interest.
The ETH WBTC Yield Farm strategy generates yield by staking ETH and WBTC in AMM(automated market maker) farms that distribute rewards to stakers. This strategy stakes in Uniswap. It periodically claims LP (liquidity provider) rewards, sells them for ETH and WBTC, and stakes that ETH and WBTC to generate more LP rewards.
This liquidity mining program ended at 12:00 UTC on November 17, 2020. If you missed out on this one, don’t worry. DeFi Pulse has created a DeFi index on TokenSet that includes all the blue chips in the current crypto market. In this DeFi Pulse Index, you can see $AAVE, $YFI, $UNI, and almost all the popular DeFi tokens.
Check more DeFi token indexes here in our previous tutorial: Don't Know Which DeFi Token to Pick? Here You Could Invest ALL.
Not satisfied with all the indexes we introduced above? You definitely have more options on TokenSets.
Some of the top crypto traders and institutions have also created their indexes. You can explore and find the one with the most satisfying interest rate or the most profitable trading history.
What’s more, if you are confident with your portfolio and trading strategies, you can also create your Set, trade for your followers, and get a fee each time someone buys your Set.
You may also like: