Coinbase Launches Wrapped Bitcoin on Ethereum and Base Network

Coinbase has introduced a new token called Coinbase Wrapped BTC (cbBTC), which is an ERC20 token backed 1:1 by Bitcoin held in Coinbase custody, as revealed by the company recently. Initially, cbBTC will be compatible with Base and Ethereum, with future plans to extend its support to additional chains.

The primary goal behind this initiative, according to Coinbase, is to enhance the utility and financial freedom of Bitcoin by empowering Coinbase clients to seamlessly engage with DeFi applications within the Ethereum ecosystem using their existing Bitcoin assets.

The company emphasized that cbBTC is meticulously crafted to serve as a trustworthy and credible wrapped version of Bitcoin, leveraging Coinbase’s secure custody of billions in BTC for both institutional clients and customers globally.

By establishing a connection between substantial off-chain Bitcoin liquidity and cost-effective, high-speed financial networks on Base and Ethereum, cbBTC plays a pivotal role in fostering a more efficient, interconnected, and expansive financial landscape, as highlighted by Coinbase.

With the introduction of Coinbase Wrapped BTC, users can explore innovative DeFi applications such as providing Bitcoin as liquidity to DeFi protocols or utilizing it as collateral to borrow other cryptocurrencies. Several prominent DeFi platforms, including Aerodrome, Curve, Aave, Morpho, and Compound, among others, will extend support for cbBTC right from its launch.

Regarding the functionality of Coinbase Wrapped BTC, when a Coinbase user transfers their BTC to a Base or Ethereum address, their Bitcoin automatically converts into cbBTC at a 1:1 ratio. Similarly, if a user receives cbBTC in their Coinbase account, it seamlessly converts back into BTC at a 1:1 ratio.

Initially, the features for sending and receiving cbBTC are accessible on Coinbase in the US (excluding New York State), UK, EEA states, Singapore, Australia, and Brazil. This move by Coinbase marks a significant step towards bridging the gap between the Bitcoin and Ethereum ecosystems, offering enhanced accessibility and versatility for users engaging with DeFi applications.