- 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 overall 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 totally backed 1:1 by Coinbase’s Bitcoin holdings, permitting holders to work together with decentralized finance (DeFi) functions on Ethereum and Base.
The launch of cbBTC offers 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 in depth Bitcoin holdings again all the 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 overall Bitcoin provide. This ensures sturdy liquidity for cbBTC holders.
The variety of cbBTC tokens in circulation shall be immediately 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 handle 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 distributed again to a Coinbase account, reworking the wrapped asset again into Bitcoin.
Unlike 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) like Aerodrome and Curve. Additionally, third-party exchanges might select to record cbBTC sooner or later.
Expanding decentralized monetary entry
The introduction of cbBTC is not only a technical development but in addition a part of Coinbase’s broader mission to develop decentralized monetary entry.
Will Robinson, Coinbase’s Vice President of Engineering, has highlighted cbBTC’s potential to deliver “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 pacesetter within the tokenization area.
Notably, Coinbase’s transfer comes shortly after BitGo’s announcement relating to custody providers for wBTC, additional fueling competitors within the wrapped Bitcoin market.
With help from main DeFi protocols, cbBTC is may play a key position in shaping the way forward for decentralized finance.
