- 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) purposes on Ethereum and Base.
The discharge of cbBTC gives an progressive bridge between Bitcoin and Ethereum’s DeFi ecosystem, giving Bitcoin holders extra methods to lend, borrow, and earn yields with their property.
cbBTC is backed by Coinbase’s Bitcoin holdings
Coinbase’s in depth Bitcoin holdings again the 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 can be instantly 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 tackle on Base or Ethereum, their BTC is routinely 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, remodeling the wrapped asset 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 it will likely be accessible on decentralized exchanges (DEXs) like Aerodrome and Curve. Moreover, third-party exchanges might select to checklist cbBTC sooner or later.
Increasing decentralized monetary entry
The introduction of cbBTC is not only a technical development but additionally 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 convey “1 billion individuals on-chain.”
By offering Bitcoin holders with entry to DeFi purposes similar to 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 concerning custody providers for wBTC, additional fueling competitors within the wrapped Bitcoin market.
With assist from main DeFi protocols, cbBTC is might play a key function in shaping the way forward for decentralized finance.