The new token functions as a bridge between the Bitcoin and Ethereum ecosystems.
Key Takeaways
- Coinbase's cbBTC enables millions of customers to access DeFi apps using their Bitcoin holdings.
- cbBTC is backed 1:1 by Bitcoin in Coinbase custody, fostering trust and liquidity in the DeFi ecosystem.
Coinbase has launched a new Wrapped Bitcoin dubbed Coinbase Wrapped BTC (cbBTC), an ERC20 token backed 1:1 by Bitcoin held in Coinbase custody, as announced by the company today. At launch, cbBTC will be supported on Base and Ethereum, with plans to expand to more chains.
According to Coinbase, the move aims to increase utility and economic freedom for Bitcoin by enabling Coinbase customers to seamlessly access DeFi apps within the Ethereum ecosystem using their existing Bitcoin holdings.
The company said its cbBTC is designed to be a trusted and reputable wrapped version of Bitcoin, leveraging Coinbase’s secure custody of billions in BTC for institutions and customers worldwide.
By linking deep off-chain Bitcoin liquidity to low-cost, high-speed financial rails on Base and Ethereum, cbBTC contributes to building a more efficient, interconnected, and expansive financial ecosystem, Coinbase noted.
With Coinbase Wrapped BTC, users can engage in novel DeFi use cases such as providing Bitcoin as liquidity to DeFi protocols or using it as collateral to borrow other crypto assets. Numerous popular DeFi apps, including Aerodrome, Curve, Aave, Morpho, and Compound, among others, will support cbBTC on day one.
How Coinbase Wrapped BTC works
As noted, when a Coinbase user sends their BTC to a Base or Ethereum address, their BTC is automatically converted into cbBTC at a 1:1 ratio. Similarly, if a user receives cbBTC in their Coinbase account, it will be automatically converted into BTC at a 1:1 ratio.
Initially, cbBTC send and receive features are available on Coinbase in the US (excluding New York State), UK, EEA states, Singapore, Australia, and Brazil.
