- Coinbase launches cbBTC, an ERC20 token backed 1:1 by Bitcoin in its custody.
- cbBTC permits BTC holders to entry DeFi apps like Aave, Compound, and MakerDAO.
- Over 843,783 Bitcoins again cbBTC, representing 4% of the entire Bitcoin provide.
Coinbase, the most important cryptocurrency alternate within the US, has formally launched its new tokenization product, Coinbase Wrapped Bitcoin (cbBTC), marking a big growth within the tokenization of Bitcoin throughout blockchains.
The newly launched ERC20 token is absolutely backed 1:1 by Coinbase’s Bitcoin holdings, permitting holders to work together with decentralized finance (DeFi) purposes on Ethereum and Base.
The discharge of cbBTC supplies an revolutionary bridge between Bitcoin and Ethereum’s DeFi ecosystem, giving Bitcoin holders extra methods to lend, borrow, and earn yields with their property.
cbBTC is backed by Coinbase’s Bitcoin holdings
Coinbase’s in depth Bitcoin holdings again your entire provide of cbBTC. As of now, Coinbase holds over 843,783 Bitcoins in custody, valued at round $48.7 billion, representing greater than 4% of the entire Bitcoin provide. This ensures sturdy liquidity for cbBTC holders.
The variety of cbBTC tokens in circulation will likely be straight restricted by the quantity of Bitcoin Coinbase owns.
How cbBTC works
The mechanics behind cbBTC are easy but efficient. When customers switch Bitcoin from Coinbase to an deal with on Base or Ethereum, their BTC is mechanically transformed into cbBTC at a 1:1 ratio. This conversion occurs seamlessly, and the reverse course of happens when cbBTC is distributed again to a Coinbase account, remodeling the wrapped asset again into Bitcoin.
In contrast to a typical token launch, cbBTC is not going to have a separate order e book or buying and selling pair on Coinbase, however it is going to be accessible on decentralized exchanges (DEXs) like Aerodrome and Curve. Moreover, third-party exchanges could select to checklist cbBTC sooner or later.
Increasing decentralized monetary entry
The introduction of cbBTC isn’t just a technical development but in addition a part of Coinbase’s broader mission to increase decentralized monetary entry.
Will Robinson, Coinbase’s Vice President of Engineering, has highlighted cbBTC’s potential to convey “1 billion folks on-chain.”
By offering Bitcoin holders with entry to DeFi purposes corresponding to Aave, Compound, and MakerDAO, cbBTC enhances the utility of Bitcoin, serving to customers combine their BTC right into a wider monetary ecosystem.
With the rising demand for Bitcoin-based DeFi merchandise, cbBTC positions Coinbase as a frontrunner within the tokenization house.
Notably, Coinbase’s transfer comes shortly after BitGo’s announcement concerning custody providers for wBTC, additional fueling competitors within the wrapped Bitcoin market.
With assist from main DeFi protocols, cbBTC is may play a key function in shaping the way forward for decentralized finance.
