Wrapped Monero (wXMR) Goes Live On Ethereum Extending DeFi Capabilities To Holders
Cryptocurrency custodian BTSE introduces ‘Wrapped Monero’ on to the Ethereum blockchain. This aims to boost the overall DeFi capabilities to XMR holders.
Privacy tokens such as Monero (XMR) are widely used to mask transactions and preserve user privacy– factors have led to the delisting of XMR on multiple exchanges; Bittrex, the latest exchange to delist privacy-enabled cryptocurrencies. However, this could change with the latest development from the crypto custodian, BTSE – wrapped Monero (wXMR) – a synthetic token built on Ethereum and backed on a 1:1 basis to XMR.
To obtain wXMR, users will need to deposit XMR to BTSE and use the conversion feature to wrap and unwrap them at will at a 1:1 ratio. BTSE will be the sole custodian and in charge of securing the XMR tokens deposited to mint the wXMR. This being the first-of-its-kind asset, BTSE stated the “Proof of Reserves” on privacy tokens is a bit harder than on open blockchains such as Bitcoin and Ethereum.
So, Why Wrapped Monero?
The launch of wXMR tokens offers users a gateway to spend and use their XMR tokens on Ethereum, expanding the overall DeFi ecosystem. This is expected to “bring additional liquidity to the DeFi ecosystem,” the statement from BTSE reads. Wrapped XMR will allow users of XMR to use their tokens on DeFi products to borrow directly, lend, yield farm, and any other function without the need to sell their tokens to ETH or stablecoins.
Moreover, this is aiming to change the bad publicity that privacy-enabled cryptocurrencies are getting. Over the past year, multiple exchanges have delisted privacy coins such as XMR, DASH, and Zcash from their platforms, citing regulatory uncertainty as to the main reason. Following the FATF ‘Travel Rule’ notice, OKEX Korea paused trading of XMR. Shortly after, Colorado-based Shapeshift delisted privacy coins adding to the unceremonious delisting of these coins from BitOasis and Bittrex.
The delisting of XMR from regulated crypto exchanges arises from money laundering fears and extreme privacy that the crypto employs. With over $2.5 billion market cap, Monero is the largest private crypto employing the “Cryptonote” algorithm to obfuscate both the sender’s and receiver’s address.
Such privacy has seen the coin rise as one of the most popular coins on dark web marketplaces and wanted ransomware payment. In October, ahead of the U.S. Presidential election, hackers demanded XMR payment after attacking Donald Trump’s official campaign website.
The quest to unmask Monero’s privacy led the IRS to raise a $625,000 bounty for companies to build a tracking solution for Monero and the Lightning Network. A cybersecurity firm, CipherTrace, in November, registered its second patent to track Monero.