The growing popularity of decentralized finance (DeFi) has attracted many other digital assets to Ethereum, including Bitcoin, in a wrapped layer one solution. The latest to join the league is the privacy-centric coin Zcash (ZEC). The Wrapped Zcash is brought into the Decentralized ecosystem by Anchorage in association with Tokensoft.
Wrapped ZCash (wZEC) is the first asset launched by the “wrapped” project in association with Ethereum tokenizers Tokensoft and the qualified custodian Anchorage. The liquidity for the wrapped project would be offered by over-the-counter (OTC) liquidity provided by CMS Holdings.
However, Wrapped Zcash is not the first wrapped digital asset on Ethereum. Wrapped Bitcoin has been quite popular as the DeFi market continues to explode. A wrapped digital asset transfers the value of that particular digital asset onto the Ethereum blockchain by creating an ERC-20 token with a 1:1 value representation against the asset. Thus one Wrapped bitcoin would be equivalent in value to that of 1 bitcoin.
This allows for other digital asset holders to access the DeFi space and collateralize that asset instead of buying Ether and then collateralizing it. This also helps in increasing the liquidity of the DEX ecosystem.
Zooko Wilcox-O’Hearn, Zcash founder and Electric Coin Company CEO, commented on their recent association with Anchorage and Tokensoft and said,
“I’m thrilled that there is such interest, and that people can, and do, innovate and deploy extensions on top of Zcash without the Electric Coin Company’s knowledge or approval.”
“I also agree that it’s great for people to have more alternatives to centralized exchanges (CEXs), and the way that CEX’s have to comply with arbitrary demands from their banks.”