Newly Launched cbBTC by Coinbase: Wrapped Bitcoin Now Available

Coinbase has recently unveiled its own iteration of wrapped bitcoin, known as cbBTC, on the Ethereum and Base networks, enabling users to engage with bitcoin in decentralized finance (DeFi) applications.

cbBTC is backed by various DeFi services for trading, lending, and serving as collateral, offering automatic conversion capabilities for Coinbase users transferring bitcoin to or from these networks.

This development comes on the heels of Coinbase dropping hints about venturing into the wrapped bitcoin market, aiming to compete with BitGo’s WBTC, the current leader, with ambitions to nurture a substantial bitcoin ecosystem on Base.

A tokenized version of bitcoin (BTC) provided by Coinbase has been launched on the Ethereum and Base networks. This move sees the crypto exchange entering a market where the primary player is supported by more than $8 billion worth of the asset.

The Coinbase Wrapped BTC (cbBTC) functions as an ERC-20 token, pegged on a 1:1 ratio with bitcoin (BTC) held by Coinbase. These wrapped tokens empower users to leverage their existing bitcoin in novel ways onchain, such as contributing their bitcoin as liquidity to DeFi protocols or using it as collateral to borrow other cryptocurrencies.

Several DeFi services are poised to extend support for cbBTC starting Thursday, according to Coinbase, including exchanges like Aerodrome and Curve, lending platforms such as Aave, Sky Protocol, Compound, real-world assets provider Maple, and cross-chain bridges like deBridge, among others.

When Coinbase users transfer bitcoin from the exchange to specific addresses on Base or Ethereum, it will automatically convert to cbBTC at a 1:1 ratio. Conversely, when users receive cbBTC in their Coinbase accounts, it will be converted back to BTC at the same ratio.

Initially, cbBTC will be accessible to Coinbase users in the U.S. (excluding New York State), U.K., EEA states, Singapore, Australia, and Brazil.

This token launch follows Coinbase’s earlier teaser announcement amidst the BitGo controversy surrounding its wrapped bitcoin (WBTC) token, a category leader valued at over $8 billion as of the latest update.

Jesse Pollak, the creator of Base, previously mentioned the team’s intention to establish a “massive bitcoin economy” on the network.