The debut of Coinbase’s cbBTC comes roughly a month after BitGo announced controversial custodial changes to wBTC.
Coinbase, the largest crypto exchange in the U.S., holds almost 844,000 bitcoins onchain.
(Shutterstock/Nadezda Murmakova)
Posted September 12, 2024 at 7:00 am EST.
Coinbase announced on Thursday the rollout of its alternative tokenized version of BTC on its layer 2 network Base as well as Ethereum mainnet, marking the entrance of a major new player in the market to provide a tokenized version of BTC on other blockchains. Coinbase is the largest crypto exchange in the U.S.
Coinbase’s cbBTC is backed 1:1 by BTC held in the exchange’s custody, according to a press release shared with Unchained. When users send BTC from Coinbase to an address on Base or Ethereum, the BTC will automatically be converted to cbBTC and vice versa.
Data from blockchain analytics firm Arkham shows Coinbase has over 843,783 bitcoins in its onchain holdings, worth almost $48.7 billion at current prices. The number of cbBTC tokens Coinbase can issue is a function of how many bitcoins the exchange holds. Coinbase’s BTC holdings represent over 4% of BTC’s total supply of 21 million.
“From our perspective, we think it’s great to see more bitcoin being used productively onchain, especially given today’s market dynamics where we have seemingly secular flows of fresh capital going primarily to BTC via ETFs,” Ian Unsworth, the co-founder of crypto research firm Kairos, wrote via Telegram to Unchained.
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The launch of cbBTC comes roughly a month after BitGo, the digital asset custodian that controls the multi-signature wallet holding the bitcoins backing wrapped bitcoin (wBTC), announced custodial changes regarding its flagship product. BitGo said on Aug. 9 that TRON founder Justin Sun will be a part of the new custodial operations of wBTC, sparking concern among crypto natives, given Sun’s checkered reputation. WBTC had a market cap of nearly $8.8 billion at presstime, according to CoinGecko.
Coinbase teased cbBTC’s launch in an X post just four days after BitGo’s announcement about Sun’s involvement.
Coinbase’s vice-president of engineering, Will Robinson, said in a Telegram message to Unchained that cbBTC is “one step closer to our vision of bringing 1 billion people onchain. By making it easier for bitcoin holders to access DeFi, Coinbase is helping to build a more inclusive financial system where anyone, anywhere, can participate in the future of finance.”
Several DeFi protocols will support cbBTC on day one, including decentralized exchanges Aerodrome and Curve, according to the press release. On Tuesday, ahead of cbBTC’s official launch, Aave Chan Initiative, a service provider of the Aave DAO, created a governance proposal to onboard Coinbase’s cbBTC to Aave v3, the latest version of the lending protocol. “We believe cbBTC will have a natural market fit and an audience in both Base and Mainnet Aave pools,” Aave Chan Initiative founder Marc Zeller told Unchained via Telegram. Zeller noted that decentralization is a spectrum and that specific audiences have their preferences. “cbBTC might get the favor of a more institutional crowd,” Zeller said.
Coinbase’s stock has almost doubled in the past year, but it has declined 18% in the last month to trade at $157.22, data from Yahoo Finance shows.
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