- Coinbase has launched cbBTC, an ERC20 token backed 1:1 by Bitcoin that it custodies.
- cbBTC permits BTC holders to entry DeFi apps akin to Aave, Compound, and MakerDAO.
- Over 843,783 Bitcoins again cbBTC, which represents 4% of Bitcoin’s complete provide.
Coinbase, the most important cryptocurrency alternate in america, has formally launched its new tokenization product, Coinbase Wrapped Bitcoin (cbBTC), marking a serious breakthrough within the tokenization of Bitcoin throughout blockchains.
The newly launched ERC20 token is totally backed 1:1 by Coinbase's Bitcoin holdings and permits holders to work together with Ethereum and decentralized finance (DeFi) functions on Base.
The discharge of cbBTC builds an revolutionary bridge between the Bitcoin and Ethereum DeFi ecosystems, giving Bitcoin holders extra methods to lend and borrow their property and earn yield.
cbBTC is backed by Coinbase's Bitcoin holdings
Coinbase's large Bitcoin holdings again all the provide of cbBTC. Presently, Coinbase shops over 843,783 Bitcoins, valued at roughly $48.7 billion, making up over 4% of Bitcoin's complete provide. This ensures robust liquidity for cbBTC holders.
The variety of cbBTC tokens in circulation is straight restricted by the quantity of Bitcoin owned by Coinbase.
How cbBTC works
How cbBTC works is easy but efficient: when a person transfers Bitcoin from Coinbase to a Base or Ethereum tackle, the BTC is mechanically transformed to cbBTC at a 1:1 ratio. This conversion is seamless, and when cbBTC is distributed again to your Coinbase account, the reverse course of happens, changing the wrapped property again into Bitcoin.
In contrast to a typical token launch, cbBTC won’t have a separate order guide or buying and selling pair on Coinbase, however will probably be accessible on decentralized exchanges (DEXs) akin to Aerodrome and Curve. Moreover, third-party exchanges could select to listing cbBTC sooner or later.
Increasing Entry to Decentralized Finance
The introduction of cbBTC is not only a technological development, it is usually a part of Coinbase's broader mission to increase decentralized finance entry.
Coinbase VP of Engineering Will Robinson highlighted the potential of cbBTC to deliver “a billion individuals on-chain.”
By offering Bitcoin holders with entry to DeFi functions akin to Aave, Compound and MakerDAO, cbBTC goals to extend Bitcoin's utility and assist customers combine BTC into the broader monetary ecosystem.
As demand for Bitcoin-based DeFi merchandise grows, cbBTC positions Coinbase as a pacesetter within the tokenization area.
Notably, Coinbase's transfer comes on the heels of BitGo's announcement of custody providers for wBTC, additional growing competitors within the wrapped Bitcoin market.
With help from main DeFi protocols, cbBTC might play a key function in shaping the way forward for decentralized finance.
