Coinbase Unveils cbBTC: A New Wrapped Bitcoin for Ethereum and Base

Coinbase has launched a new wrapped Bitcoin token, cbBTC, on the Ethereum network and its layer-2 scaling solution, Base. This move aims to bridge the Bitcoin and Ethereum ecosystems, allowing users to leverage their Bitcoin holdings in decentralized finance (DeFi) applications.

Key Takeaways

• Seamless Integration: cbBTC is backed 1:1 by Bitcoin held in Coinbase custody, ensuring trust and liquidity.

• Automatic Conversion: Users can easily convert Bitcoin to cbBTC and vice versa at a 1:1 ratio.

• DeFi Compatibility: cbBTC will be supported on popular DeFi platforms like Aave, Compound, and Curve.

• Global Availability: Initially available in the US (excluding New York), UK, EEA states, Singapore, Australia, and Brazil.

What Is cbBTC?

Coinbase Wrapped BTC (cbBTC) is an ERC20 token backed 1:1 by Bitcoin held in Coinbase custody. This new token allows users to access DeFi apps using their Bitcoin holdings, thereby increasing the utility and economic freedom of Bitcoin.

How cbBTC Works

When a Coinbase user sends their Bitcoin to a Base or Ethereum address, it is automatically converted into cbBTC at a 1:1 ratio. Similarly, if a user receives cbBTC in their Coinbase account, it will be automatically converted back into Bitcoin at the same ratio. This feature simplifies the process of using Bitcoin in DeFi applications.

Purpose and Benefits

cbBTC aims to integrate Bitcoin into the DeFi ecosystem, which is primarily centered on Ethereum. By doing so, it allows users to leverage their Bitcoin for various DeFi purposes, such as securing loans or earning yield as a lending asset. This contributes to a more efficient, interconnected, and expansive financial ecosystem.

Industry Context

The launch of cbBTC comes shortly after BitGo faced criticism over its custodial changes to its Wrapped Bitcoin (WBTC) product. Coinbase's entry into the wrapped Bitcoin market offers a new, trusted alternative, potentially attracting a more institutional crowd.

Future Plans

Coinbase plans to expand cbBTC to additional blockchain networks and ecosystems, although specific details have not yet been provided. The company aims to create a significant Bitcoin economy on Base and other compatible networks, facilitating large-scale adoption of Bitcoin in DeFi.

Conclusion

With the launch of cbBTC, Coinbase positions itself as a key player in promoting the use of Bitcoin within DeFi. The combination of automatic conversion, integration with major DeFi networks, and support from the Base network creates a unique opportunity for users to leverage their Bitcoin in new and innovative ways.

Sources

• Coinbase debuts wrapped Bitcoin token on Ethereum and Base, Crypto Briefing.

• Coinbase Launches cbBTC Token on Ethereum and Base, UNLOCK Blockchain.

• Coinbase’s Wrapped Bitcoin Product cbBTC Launches | Unchained, Unchained Podcast.

• Coinbase launches 'cbBTC' wrapped Bitcoin digital asset, Cointelegraph.

• Coinbase launches cbBTC: its version of Wrapped Bitcoin, The Cryptonomist.