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What is eBTC? A Smarter Way to Get Bitcoin Exposure

What is eBTC? A Smarter Way to Get Bitcoin Exposure

Beginner
2025-07-28 | 5m

eBTC gives you Bitcoin price exposure without actually buying Bitcoin. Instead of holding real Bitcoin that sits idle in a wallet, eBTC lets you get the same price movements while earning extra rewards and accessing opportunities that regular Bitcoin can't offer.

Here's the simple version: you use your Ethereum to back eBTC tokens that track Bitcoin's price. Your Ethereum keeps earning staking rewards while you get Bitcoin exposure plus access to trading and earning opportunities on Ethereum.

Why Would You Want This Instead of Just Buying Bitcoin?

Most people buy Bitcoin and let it sit in a wallet doing nothing. Meanwhile, they miss out on earning opportunities because Bitcoin's blockchain doesn't support the same financial applications as Ethereum.

Here's what frustrates Bitcoin holders:

● Your Bitcoin just sits there earning nothing

● You can't easily use Bitcoin in DeFi to earn yields

● Trading Bitcoin often requires centralized exchanges

● Using Bitcoin on other blockchains requires trusting custodians or risky bridges

What eBTC solves:

● Get Bitcoin price exposure while your collateral earns staking rewards

● Trade 24/7 on decentralized exchanges

● Use your Bitcoin exposure in lending, borrowing, and yield strategies

● No need to trust centralized custodians or use cross-chain bridges

Think of it like this: instead of letting your money sit in a non-interest checking account, you put it in a high-yield savings account while also getting exposure to Bitcoin's price movements.

What Can You Actually Do with eBTC Right Now?

Earn While You Hold: Your Ethereum collateral keeps earning staking rewards (currently around 3-4% annually) while you get Bitcoin price exposure. It's like earning interest on money you've also invested in Bitcoin.

DeFi Opportunities: Use eBTC as collateral for loans, provide liquidity to earn trading fees, or participate in yield farming strategies. These options don't exist with regular Bitcoin.

Portfolio Efficiency: Instead of holding separate Bitcoin and Ethereum positions, you can manage both exposures through one Ethereum-based account.

Real Example: You have $10,000 in Ethereum. Instead of selling half to buy Bitcoin, you use your Ethereum to create $5,000 worth of eBTC. Now you have Bitcoin exposure plus Ethereum staking rewards, all while keeping your original Ethereum position.

How Does This Actually Work?

The system is simpler than it sounds. You deposit staked Ethereum (stETH) as collateral - think of it as a security deposit. The protocol lets you create eBTC tokens worth less than your collateral value to keep things safe.

Your stETH continues earning staking rewards while backing the eBTC you created. Price oracles keep eBTC's value tied to Bitcoin's price. If Bitcoin goes up 10%, your eBTC goes up 10%.

Safety Mechanism: If your collateral value drops too much compared to your eBTC, the system automatically sells some collateral to keep things balanced. This protects both you and other users.

No Fees: Unlike borrowing money from a bank, there are no interest payments. The system takes a small portion of your staking rewards instead, which is usually much cheaper.

What Are the Real Risks and Benefits?

What You Get

What You Risk

Bitcoin price exposure

Smart contract bugs or hacks

Ethereum staking rewards

Liquidation if collateral drops

24/7 DeFi trading access

Oracle manipulation risks

No custodial risk

Need more collateral than eBTC value

Transparent, on-chain operations

Ethereum network congestion costs

Best For:

● People who want Bitcoin exposure but also want to earn yields

● Active traders who prefer Ethereum's DeFi ecosystem

● Users comfortable with smart contract technology

● Investors seeking capital-efficient strategies

Skip If:

● You prefer maximum simplicity in crypto investing

● You're uncomfortable with liquidation risks

● You want true Bitcoin ownership, not price exposure

● You're new to crypto and want to start with basics

Is This Actually Used or Just Experimental?

eBTC is live and functional but still relatively niche, and it works on Ethereum DeFi protocols, but adoption is limited compared to regular Bitcoin or major altcoins.

Current Reality:

● Working technology with real users

● Limited but growing platform support

● Smaller market size than traditional Bitcoin products

● Primarily used by experienced DeFi participants

Why It Matters:

● Solves real problems with Bitcoin's limited functionality

● Provides safer alternative to wrapped Bitcoin products

● Enables new strategies not possible with regular Bitcoin

● Part of the broader trend toward more efficient capital use in crypto

The technology works, but it's still early-stage. Think of it as a useful tool for specific situations rather than a mainstream Bitcoin replacement.

How Can You Try eBTC Safely?

Learn First: Bitget's educational resources cover synthetic assets and DeFi basics. Understanding liquidation risks is important before using these protocols.

Compare Performance: Watch how eBTC tracks Bitcoin's price over time. Check if the correlation is strong enough for your needs.

Consider Your Goals: Ask yourself if you really need the extra features eBTC provides, or if regular Bitcoin better fits your investment strategy.

Understand Costs: Factor in Ethereum transaction fees, potential liquidation costs, and the opportunity cost of over-collateralization.

What Should You Expect Going Forward?

eBTC represents one approach to making Bitcoin more useful in modern DeFi. It solves real problems around capital efficiency and functionality, but it's not going to replace regular Bitcoin for most people.

Expect gradual growth as more users discover the benefits of earning yields while maintaining Bitcoin exposure. The technology will likely improve with better user interfaces, lower costs, and more platform support.

However, it will probably remain a specialized tool rather than a mainstream product. Most casual Bitcoin investors won't need the extra complexity, but active DeFi users and sophisticated investors may find it valuable.

The key question is whether the benefits of earning staking rewards and accessing DeFi opportunities outweigh the added complexity and risks. For some users and situations, the answer is increasingly yes.

Bitget provides the tools and education needed to explore eBTC as crypto markets continue evolving. Whether for simple trading or advanced DeFi strategies, the platform supports engagement with these innovative approaches to Bitcoin exposure.

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