Ethereum Classic Labs has launched Wrapped ETC—becoming the latest blockchain to jump on the decentralized finance bandwagon.
It’s hoped that the release of WETC will unlock access to DeFi protocols, which are often to be found on the Ethereum blockchain. Could this lead to a thaw in frosty relations between ETC and ETH devotees, and does this render the classic network rather useless?
Not so, says Terry Culver, the CEO of ETC Labs. Speaking to Modern Consensus via email, he said demand for Ethereum Classic is “high and growing”—pointing to the fact that the cryptocurrency features in more than 100 exchange listings.
He added that Wrapped ETC will make this digital asset much more versatile than it is at present: “WETC is likely to contribute to the growth of the ETC network by facilitating access to the fast-growing DeFi space and supporting the closing of financial inclusion gaps.”
James Wo, the founder and chairman of ETC Labs, agreed—describing DeFi as an “important force” in a world where millions of people struggle to save, trade, borrow and lend because they are unable to set up a bank account.
WETC can be stored in ERC20-compatible wallets, and it can be used as collateral for loans. ChainBridge is being used to connect the Ethereum Classic blockchain with the Ethereum mainnet. When wrapped tokens are created, ETC is locked in a smart contract and an equivalent amount of WETC is minted. ETC can also be transferred back to the original blockchain, and when this happens, the wrapped tokens are burned.
Culver told Modern Consensus that the first dApp to use WETC is set to launch on Nov. 23, serving as a bridge between ETC and DAI, the stablecoin used by many DeFi protocols. More listings are set to follow throughout December.
What’s the point?
Modern Consensus asked Culver what’s the virtue of launching WETC. If Ethereum Classic’s users were so interested in using DeFi, surely they would just snap up some ETH?
“Many people just love ETC because of its values, innovation, and potential,” Culver explained. “That’s why it’s one of the oldest and most decentralized public blockchains. ETC’s largest user base is in Asia, where the community is very loyal and active. They haven’t yet participated in DeFi, and they’re looking forward to using ETC, which they know well, to try something new in the DeFi space.”
Ethereum Classic currently has an active community of more than 120,000 people. The cryptocurrency is a minnow when compared with Ethereum—it has a market cap of $684.6 million and currently occupies No. 33 in CoinMarketCap’s rankings. By contrast, ETH continues to dominate the No. 2 spot… and its market cap is almost 80 times bigger.
ETC was created in June 2016. At the time, Ethereum’s main developers, led by Vitalik Buterin, had pursued a hard fork to reverse the theft of coins worth $55 million in coins.
Ethereum Classic has suffered a spate of 51% attacks in recent months, where a malicious actor manages to gain control of the majority of the network’s computing power—enabling them to double-spend cryptocurrency.
Work is under way to make the blockchain more secure, but some may wonder: Is ETC is missing a trick as its big brother makes the switch to a Proof-of-Stake consensus algorithm.