- 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 whole Bitcoin provide
Coinbase, the most important cryptocurrency change within the US, has formally launched its new tokenization product, Coinbase Wrapped Bitcoin (cbBTC), marking a major improvement 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) functions on Ethereum and Base. Coinbase plans to help extra chains sooner or later.
The discharge of cbBTC gives an modern bridge between Bitcoin and Ethereum’s DeFi ecosystem, giving Bitcoin holders extra methods to lend, borrow, and earn yields with their belongings.
cbBTC is backed by Coinbase’s Bitcoin holdings
Coinbase’s intensive Bitcoin holdings again your complete 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 whole Bitcoin provide. This ensures sturdy liquidity for cbBTC holders.
The variety of cbBTC tokens in circulation will probably be immediately restricted by the quantity of Bitcoin Coinbase owns.
How does cbBTC work?
When customers switch Bitcoin from Coinbase to an deal with on Base or Ethereum, their BTC is robotically transformed into cbBTC at a 1:1 ratio. This conversion occurs seamlessly, and the reverse course of happens when cbBTC is shipped again to a Coinbase account, reworking the wrapped asset again into Bitcoin.
Not like a typical token launch, cbBTC is not going to have a separate order guide or buying and selling pair on Coinbase, however will probably be accessible on decentralized exchanges (DEXs) like Aerodrome and Curve. Moreover, third-party exchanges could select to record cbBTC sooner or later.
At launch, cbBTC will probably be accessible on Coinbase in Australia, Brazil, EEA states, Singapore, the UK, and the US, excluding New York State.
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 broaden decentralized monetary entry.
Will Robinson, Coinbase’s Vice President of Engineering, has highlighted cbBTC’s potential to carry “1 billion people on-chain.”
By offering Bitcoin holders with entry to DeFi functions resembling 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 help from main DeFi protocols, cbBTC might play a key function in shaping the way forward for decentralized finance.
