Coinbase Boosts cbBTC, a Wrapped Bitcoin Variant for Fundamental Blockchain
Coinbase, a prominent crypto exchange, is apparently working on creating an alternative to BitGo’s wrapped bitcoin, known as wBTC, to operate on its layer-2 blockchain Base. This move is suggested by posts from Coinbase and Base creator Jesse Pollack, hinting at the development of a wrapped bitcoin similar to wBTC to function on the layer-2 blockchain.
Despite some controversy surrounding wBTC, BitGo’s protocol remains stable, with recent developments indicating a joint venture with BiT Global, a custody platform linked to the Tron ecosystem and Tron founder Justin Sun. The venture aims to maintain the use of BitGo’s multisignature technology and deep cold storage, ensuring continuity in operations.
The announcement from Coinbase has sparked speculation, with cryptic posts hinting at the introduction of “cbBTC” on the horizon. Jesse Pollack’s subsequent post highlighted the team’s vision to establish a significant bitcoin economy within the network, showcasing their commitment to expanding the crypto landscape.
Wrapping a crypto token, such as bitcoin, enables its availability on different protocols beyond its original design, enhancing liquidity within the target ecosystem. Each wrapped bitcoin represents the original asset, stored in custody. When a trader wishes to redeem the wrapped token for bitcoin, the wrapped version is “burnt” or deleted from the chain, releasing the original asset.
While reactions to Coinbase’s initiative have been mostly neutral due to the absence of technical changes and the continued verifiability of underlying reserves on-chain, some concerns have surfaced. Forums, like MakerDAO, have expressed reservations, leading to an executive proposal suggesting the halt of wBTC borrowing and a reduction of wBTC debt limits to mitigate risks.
On-chain data analysis indicates no significant supply changes for wBTC, indicating a lack of mass exodus by traders from the protocol. Justin Sun clarified that there would be no alterations to wBTC beyond the joint venture, emphasizing that he does not control the protocol’s private keys or BTC reserves, highlighting his strategic involvement in the project.
In conclusion, Coinbase’s exploration of an alternative to wBTC and the evolving landscape of wrapped tokens demonstrate the continuous innovation and adaptation within the crypto sphere, shaping the future of digital assets and blockchain technology.
