Coinbase has launched cbBTC, a tokenized version of Bitcoin, available on the Ethereum and Base networks, allowing BTC to be used in the DeFi ecosystem, with a 1:1 coverage in Bitcoin held by Coinbase.
cbBTC directly competes with BitGo’s WBTC, aiming to offer a more transparent and better-integrated alternative, with advanced features and automatic conversion to facilitate usage in DeFi applications.
The launch aims to expand the use of Bitcoin in DeFi and is part of Coinbase’s strategy to strengthen its Base blockchain, with planned expansion to other regions and blockchains.
cbBTC: A New Alternative to Wrapped Bitcoin
Coinbase, one of the world’s leading crypto exchange platforms, has officially launched its version of wrapped Bitcoin, named cbBTC. This initiative marks a significant milestone in the use of Bitcoin within the decentralized finance ecosystem.
Initial availability on the Ethereum and Base networks, cbBTC allows users to access decentralized applications while using their bitcoins, with planned expansion to other blockchains in the coming months.
cbBTC: A New Alternative to Wrapped Bitcoin
The concept of wrapped Bitcoin is not new. It involves tokenizing Bitcoin on other blockchains like Ethereum, where users can exchange or use bitcoins while remaining on the Ethereum blockchain. Each cbBTC token is backed by Bitcoin in a 1:1 ratio, meaning that each cbBTC in circulation is fully covered by a BTC held by Coinbase.
This new token directly competes with BitGo’s WBTC, which currently dominates the market with over $8 billion in tokenized Bitcoins. By launching cbBTC, Coinbase aims to offer a competitive alternative, with advanced features and direct integration with the Coinbase platform for simplified conversion.
A Direct Link Between Bitcoin and DeFi
With the introduction of cbBTC, Coinbase users can now use their Bitcoins in a more flexible manner. Through the automated conversion process, users who send BTC from their Coinbase accounts to specific addresses on the Ethereum or Base networks will have their assets automatically converted to cbBTC, and vice versa. This process eliminates the need for intermediaries and facilitates participation in DeFi projects.
Users can lend their cbBTC on platforms like Aave and Compound or use them as collateral to borrow other cryptocurrencies. Protocols like Curve and Aerodrome will also offer exchange services for cbBTC. Additionally, deBridge will provide a cross-chain bridge solution to facilitate transactions between different blockchains.
Challenges and Opportunities for Coinbase
The launch of cbBTC comes at a crucial time, as market leader WBTC faces controversies. Coinbase seems to leverage this context to introduce a more transparent and better-integrated alternative. Jesse Pollak, the creator of the Base blockchain, had already stated that Coinbase’s goal was to “build a massive Bitcoin economy” on the Base network. This launch is a first step in that direction, with a clear ambition to strengthen the Bitcoin ecosystem within DeFi.
Strategic Expansion
Currently, cbBTC is available to Coinbase users in the United States (excluding the state of New York), the United Kingdom, the European Economic Area, Singapore, Australia, and Brazil. This limited availability is expected to expand to other regions as Coinbase develops its service offerings.
The launch of cbBTC also fits into Coinbase’s broader strategy to attract more users to its Base blockchain, a layer 2 solution designed to improve the efficiency and accessibility of decentralized transactions.
