Wrapped Bitcoin (Sollet)Price

(SOBTC)

Wrapped Bitcoin (Sollet), often referred to by its ticker soBTC, is a digital asset that was designed to represent Bitcoin on the Solana blockchain. Its primary purpose was to bridge the value of Bitcoin into the Solana ecosystem, allowing users to participate in decentralized finance applications, such as lending and trading, using a Bitcoin-equivalent token on a faster network. The token was created through the Sollet custodial bridge, which was a popular tool in the early days of the Solana network. When users deposited native Bitcoin into the Sollet bridge, an equivalent amount of soBTC was minted on Solana. This process relied on a central custodian to hold the actual Bitcoin in reserve, ensuring that every soBTC token was supposedly backed one-to-one by real Bitcoin. Historically, the custodial functions for soBTC were managed by entities closely associated with the FTX cryptocurrency exchange and Alameda Research. These organizations were responsible for maintaining the Bitcoin reserves that gave the wrapped token its value. Because the system was custodial rather than decentralized, users had to trust that the bridge operators were safely holding the underlying assets. The status of soBTC changed significantly following the collapse of FTX and Alameda Research in late 2022. During the bankruptcy proceedings of these entities, it was revealed that the Bitcoin reserves intended to back the Sollet-wrapped assets were no longer accessible or were not fully accounted for. As a result, the bridge effectively stopped functioning, and the ability for holders to redeem their soBTC for native Bitcoin was lost. Since the collapse, soBTC has been widely regarded as an unbacked or "broken" asset. While the tokens still exist on the Solana blockchain and can occasionally be found on decentralized exchanges, they no longer maintain a one-to-one relationship with the value of Bitcoin. The project serves as a significant example of the custodial risks associated with centralized bridge solutions in the Web3 space. Most Solana-based protocols and users have since migrated to alternative, more transparent wrapping solutions that do not rely on the defunct Sollet infrastructure. Learn more

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