Coinbase has just launched its version of wrapped bitcoin, called cbBTC, on the Ethereum and Base networks. This new feature allows users to utilize bitcoin in decentralized finance (DeFi) applications.
With cbBTC, you can trade, lend, and use your bitcoin as collateral. It’s designed to work seamlessly with various DeFi platforms. Plus, there’s an automatic conversion feature for Coinbase users transferring bitcoin to or from these networks.
So, what is cbBTC? It’s an ERC-20 token that’s backed 1:1 by bitcoin held by Coinbase. This means that for every cbBTC you have, there’s an equivalent bitcoin stored safely at Coinbase. This wrapped token lets you use your bitcoin in new ways, like providing liquidity to DeFi protocols or borrowing other cryptocurrencies.
Several DeFi services are gearing up to support cbBTC. You can expect to see it on exchanges like Aerodrome and Curve, lending platforms such as Aave, Sky Protocol, and Compound, as well as real-world asset providers like Maple and cross-chain bridges like deBridge.
When you send bitcoin from your Coinbase account to specific addresses on Base or Ethereum, it will automatically convert to cbBTC at a 1:1 ratio. And when you receive cbBTC back in your Coinbase account, it will convert back to bitcoin at the same ratio.
At launch, cbBTC will be available to users in the U.S. (excluding New York), the U.K., EEA states, Singapore, Australia, and Brazil.
This launch comes on the heels of Coinbase hinting at entering the wrapped bitcoin market. They aim to challenge BitGo's WBTC, which currently leads the market with over $8 billion in assets.
Jesse Pollak, who created Base, mentioned that the team plans to build a “massive bitcoin economy” on the network. It’s an exciting time for bitcoin users looking to explore new opportunities!