Coinbase has unveiled cbBTC, a wrapped version of Bitcoin, that allows users to leverage their Bitcoin holdings in decentralized finance (DeFi) applications on Ethereum and Base. As the largest and most widely recognized cryptocurrency, Bitcoin’s integration with DeFi marks a significant step in expanding its use cases beyond simple holding or trading.
With the launch of cbBTC, Coinbase users can now seamlessly transfer their Bitcoin to the Ethereum and Base networks. This opens up new possibilities for Bitcoin holders, who can participate in DeFi applications such as decentralized exchanges (DEX), lending platforms, and yield protocols using Bitcoin, all without selling or converting to other cryptocurrencies.
One of the main advantages of cbBTC is its 1:1 backing by Bitcoin held by Coinbase, which has a long-standing reputation for securely managing large amounts of crypto assets. According to Coinbase’s blog post, cbBTC is a reliable and trusted tool to access deeper liquidity in the DeFi space. By wrapping Bitcoin and connecting it to more blockchain networks, Coinbase aims to create a more interconnected financial ecosystem that can accelerate the adoption of Bitcoin across various DeFi platforms.
One of the biggest challenges Bitcoin holders have faced is the difficulty of using their Bitcoin in new ways on-chain. With cbBTC, this friction is removed, allowing users to leverage their Bitcoin holdings in a variety of decentralized applications. Some of the most popular DeFi platforms that will support cbBTC out of the gate include household names like Uniswap, Aave, Compound, and Curve.
Bitcoin users can now provide liquidity, participate in loans, or even borrow against their Bitcoins through these platforms. In addition to DeFi, cbBTC is expected to support cross-chain swaps, oracles, and real-world asset protocols, further expanding its potential use cases.
For Coinbase users, converting Bitcoin to cbBTC is simple. When users send their Bitcoin from Coinbase to a Base or Ethereum address, the system automatically converts it to cbBTC on a 1:1 basis. Similarly, when users receive cbBTC into their Coinbase account, it is instantly converted back to Bitcoin.
Unlike other assets, cbBTC will not have a dedicated order book or trading pair on Coinbase’s main platform, but it will be available on decentralized exchanges (DEXs) and potentially third-party platforms that choose to support it.
At launch, cbBTC will be available to users in regions including the US, UK, EEA states, Singapore, Australia, and Brazil, with global accessibility on the Base and Ethereum networks. Coinbase is also working to expand cbBTC’s availability on other blockchain networks in the future, helping Bitcoin gain even more traction in the world of DeFi.
Featured image via Coinbase
