Main Insights
- Coinbase has introduced cbBTC, allowing millions of users to utilize their Bitcoin for accessing DeFi applications.
- cbBTC is fully backed 1:1 by Bitcoin stored in Coinbase custody, promoting reliability and liquidity within the DeFi space.
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Coinbase has introduced a new Wrapped Bitcoin called Coinbase Wrapped BTC (cbBTC), an ERC20 token that is entirely supported by Bitcoin held in Coinbase custody, as reported by the company today. At its launch, cbBTC will be available on both Base and Ethereum, with aspirations to grow its presence across additional chains.
Coinbase has stated that this initiative seeks to expand the utility and economic flexibility of Bitcoin by allowing its users to access DeFi apps on the Ethereum network seamlessly while using their existing Bitcoin assets.
The organization emphasized that cbBTC is intended to be a reliable and trustworthy version of wrapped Bitcoin, utilizing Coinbase’s safekeeping of billions in BTC for both institutions and individual users globally.
By establishing a connection between substantial off-chain Bitcoin liquidity and affordable, high-speed financial channels on Base and Ethereum, cbBTC aims to enhance the efficiency and connectivity of the broader financial system, Coinbase observed.
With Coinbase Wrapped BTC, users can explore innovative DeFi applications, such as supplying Bitcoin as liquidity to DeFi protocols or leveraging it as collateral to secure other cryptocurrency assets. Various popular DeFi platforms, including Aerodrome, Curve, Aave, Morpho, and Compound, will support cbBTC from day one.
Understanding How Coinbase Wrapped BTC Operates
As mentioned, whenever a Coinbase user deposits their BTC to a Base or Ethereum address, that BTC is automatically transformed into cbBTC at a 1:1 ratio. Likewise, if a user receives cbBTC in their Coinbase account, it is seamlessly converted back into BTC at a 1:1 ratio.
At the outset, the functionalities for sending and receiving cbBTC are rolled out on Coinbase in the U.S. (excluding New York), UK, EEA nations, Singapore, Australia, and Brazil.
