Coinbase Wrapped Bitcoin (cbBTC) Now Live
As the most widely held and oldest crypto asset, Bitcoin plays a pivotal role in introducing users to the world of crypto. With its strong reputation and unmatched liquidity, Bitcoin has served as the foundation for the cryptocurrency industry. However, Bitcoin’s utility in decentralized finance (DeFi) has long been limited—until now.
Coinbase, a leading cryptocurrency exchange, is ushering in a new era for Bitcoin utility by launching cbBTC, a wrapped version of Bitcoin that brings Bitcoin into the Ethereum and Base ecosystems. This move enhances the usability of Bitcoin and enables millions of users to access financial applications (DApps) securely and seamlessly.
What Is cbBTC?
cbBTC is a wrapped Bitcoin asset developed by Coinbase, designed to integrate Bitcoin into the DeFi space. By bridging Bitcoin to Ethereum and Base, cbBTC allows Bitcoin holders to engage with wide range of DeFi applications. This includes opportunities like:
- Providing liquidity to DEXs (decentralized exchanges)
- Using Bitcoin as collateral for loans on DeFi lending platforms
- Earning yield by staking or supplying cbBTC in yield vaults
What makes cbBTC particularly attractive is that it is backed 1:1 by Bitcoin held in Coinbase’s custody, a system trusted by institutions and retail users alike for over a decade. With Coinbase’s security infrastructure backing it, cbBTC removes many of the risks associated with wrapped assets, such as reliance on bridges or custodial vulnerabilities.
Access to Secure and Deep Liquidity
One of the key benefits of cbBTC is its connection to deep off-chain Bitcoin liquidity, now accessible through the low-cost, high-speed financial rails of Base and Ethereum. This innovation allows Bitcoin to interact with onchain financial systems. That too without compromising the trust and liquidity it offers as an off-chain asset. By linking Bitcoin with these blockchains, cbBTC creates a more efficient and interconnected DeFi ecosystem.
Coinbase’s cbBTC will help foster a more expansive financial system where Bitcoin can play a critical role beyond just store of value or P2P transactions. It allows for a seamless experience where users can move their Bitcoin into DeFi protocols to provide liquidity, borrow assets, or participate in yield farming.
What Can Users Do with cbBTC?
Coinbase’s cbBTC removes the major friction point of having to convert Bitcoin into Ethereum or another asset to use in DeFi. With cbBTC, users can tap directly into DeFi applications while holding their Bitcoin, opening up a host of new opportunities.
Some of the use cases for cbBTC include:
- Provide Liquidity: Use cbBTC to supply liquidity on major decentralized exchanges, earning fees or yield in return.
- Borrowing and Lending: Bitcoin holders can use cbBTC as collateral to borrow other crypto assets or provide liquidity for lending protocols.
- Cross-chain DeFi: With Base and Ethereum integration, users can move their Bitcoin into cross-chain DeFi services, accessing yield vaults, lending protocols, and other decentralized applications.
Popular DeFi applications that support cbBTC at launch include:
- Decentralized Exchanges (DEXs): Aerodrome, Curve, Matcha, Uniswap
- Lending Platforms: Aave, Compound, Morpho, Moonwell, Spark
- Yield Vaults: Mellow, Veda
- Cross-Chain Swaps: DeBridge, DeFinitive
- Oracles: Chronicle Labs
- Risk Management Platforms: Block Analitica, Gauntlet, Steakhouse
- Real World Assets (RWA): Maple
With such broad DeFi support, cbBTC will likely see wide adoption across a range of financial protocols, providing even more liquidity and engagement opportunities for Bitcoin holders.
How Does cbBTC Work?
The cbBTC process is seamless for Coinbase users. Here’s how it works:
- Conversion to cbBTC: When users send Bitcoin from their Coinbase account to an address on Base or Ethereum, it automatically converts to cbBTC at a 1:1 ratio.
- Conversion Back to BTC: If a user receives cbBTC in their Coinbase account, it automatically converts back into Bitcoin.
- No Separate Trading Pair: Notably, cbBTC will not have its own trading pair or order book on Coinbase. Instead, users can trade it via DEXs using Coinbase Wallet or on other third-party platforms that support cbBTC.
cbBTC is available to send and receive across the following regions: the U.S. (excluding New York), UK, European Economic Area (EEA), Singapore, Australia, and Brazil. However, globally, cbBTC can be used on Base and Ethereum blockchains, ensuring broad accessibility.
Expanding Bitcoin’s Role in DeFi
The introduction of cbBTC marks an exciting shift for Bitcoin’s involvement in decentralized finance. Until now, Ethereum-based DeFi has primarily been fueled by ETH, stablecoins, and other altcoins.
This launch also represents a new chapter for Coinbase’s role in shaping the future of DeFi. By offering a secure and trusted wrapped Bitcoin, Coinbase is bridging the gap between Bitcoin’s liquidity and Ethereum’s vibrant DeFi ecosystem.
Furthermore, cbBTC has the potential to extend beyond Ethereum and Base, with Coinbase planning to expand cbBTC’s compatibility to other chains, ultimately increasing Bitcoin’s interoperability across multiple blockchains.
Conclusion: A Major Leap for Bitcoin in DeFi
The launch of cbBTC is a pivotal moment in the world of cryptocurrency and DeFi. Coinbase’s solution provides Bitcoin holders with a trusted way to access DeFi applications on Ethereum and Base, opening up new possibilities for leveraging Bitcoin’s liquidity in decentralized finance.
Whether it’s providing liquidity, earning yield, or borrowing assets, Bitcoin users can now take part in DeFi without giving up the security of holding Bitcoin. As Coinbase continues to expand cbBTC to additional chains, this move could usher in greater adoption and innovation in decentralized finance, bringing us closer to a more interconnected and efficient financial system.
