Coinbase has launched its tokenized version of Bitcoin, known as Coinbase Wrapped BTC (cbBTC), on the Ethereum and Base networks. This new offering enters a competitive market where the leading wrapped Bitcoin token, backed by over $8 billion in assets, dominates.
cbBTC is an ERC-20 token designed to be backed 1:1 by Bitcoin held by Coinbase. It enables users to leverage their Bitcoin holdings in various ways within the decentralized finance (DeFi) ecosystem. For example, users can provide their Bitcoin as liquidity for DeFi protocols or use it as collateral to borrow other cryptocurrencies.
Several DeFi platforms will support cbBTC from its launch, including exchanges Aerodrome and Curve, lending applications Aave, Sky Protocol, and Compound, as well as real-world asset provider Maple and cross-chain bridge deBridge, among others.
Coinbase users who transfer Bitcoin to designated addresses on Base or Ethereum will have it automatically converted 1:1 to cbBTC. Conversely, when cbBTC is transferred back to Coinbase, it will be converted back to Bitcoin at a 1:1 ratio.
Initially, cbBTC will be available to Coinbase users in the U.S. (excluding New York State), U.K., EEA countries, Singapore, Australia, and Brazil.
The introduction of cbBTC follows recent controversies surrounding BitGo’s wrapped Bitcoin (WBTC) token, which remains the largest player in this space with a valuation exceeding $8 billion.
Jesse Pollak, a creator of Base, had previously mentioned plans to develop a significant Bitcoin economy on the network. In response to the launch, Justin Sun, founder of Tron and partial controller of BiT Global, the entity now responsible for WBTC custody, criticized cbBTC. Sun highlighted concerns about the lack of Proof of Reserve and audits for cbBTC, claiming it operates on a “trust me” basis and can potentially freeze balances at any time.
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