Coinbase Launches cbBTC: A Wrapped Bitcoin for DeFi

On Thursday, Coinbase, the leading US cryptocurrency exchange, announced the launch of cbBTC (Coinbase Wrapped BTC). This is a 1:1 wrapped version of Bitcoin, backed by Coinbase, and taking the form of an ERC20 token. Initially, cbBTC will be supported on the Ethereum blockchain and the Coinbase-backed Base network, with plans to expand to other chains in the future.

Coinbase states that its customers can now seamlessly and securely access financial applications within the Ethereum ecosystem using their existing Bitcoin holdings. cbBTC is already being adopted by numerous decentralized finance (DeFi) platforms at launch, including decentralized exchanges Aerodrome and Curve, lending protocol Aave, and cross-chain protocol DeBridge.

In a blog post, Coinbase wrote:

"cbBTC is designed to seamlessly integrate with DeFi applications, so users can now tap into novel DeFi use cases such as providing their Bitcoin as liquidity to DeFi protocols, or borrowing other crypto assets against it as collateral."

According to Coinbase's official website, when Coinbase users transfer their BTC from Coinbase to an address on Base or Ethereum, the BTC will be automatically converted to cbBTC at a 1:1 ratio. Similarly, when users receive cbBTC in their Coinbase account, the token will be converted back to BTC at the equivalent ratio. cbBTC will not have a separate order book or trading pair on Coinbase.

It's important to note that sending and receiving cbBTC is currently only available to Coinbase customers in the United States (excluding New York), the United Kingdom, European Economic Area (EEA) countries, Singapore, Australia, and Brazil. However, the token will be accessible to global users on the Base and Ethereum chains. Users can purchase cbBTC through Coinbase Wallet or from other supported third-party exchanges.