The Coinbase Wrapped Bitcoin will operate as an ERC20 token backed 1:1 with BTC held by the exchange on behalf of the users.
Coinbase Global Inc (NASDAQ: COIN), a top-tier cryptocurrency exchange offering services to both retail and institutional investors, has today launched the Coinbase Wrapped BTC, cbBTC. According to the announcement, the cbBTC will run on the Ethereum (ETH) network and layer-two (L2) scaling solution Base as an ERC20 token.
The company confirmed that the cbBTC will be fully backed with Bitcoins at a ratio of 1:1. The launch of the cbBTC will play a crucial role in the mainstream adoption of Bitcoin through different web3 protocols that run on Ethereum or taps on EVM-compatible chains.
“When Coinbase users send their BTC from Coinbase to an address on Base or Ethereum, that BTC will automatically be converted 1:1 to cbBTC. When users receive cbBTC in their Coinbase accounts, it will be converted 1:1 from cbBTC to BTC,” Coinbase noted.
At launch, the cbBTC will be available in the United States except in New York, the United Kingdom, Singapore, Australia, and Brazil. As a result, more users can transact using Bitcoin at a faster speed and cheaper cost.
Already, the cbBTC is available on severely DeFi protocols including Aerodrome, Aave, DeBridge, DeFinitive, Morpho, Chronicle Labs, and Maple, among others.
cbBTC is onchain.
cbBTC is an ERC20 token that is backed 1:1 by Bitcoin (BTC) held by Coinbase.
This means millions of BTC holders can now securely access DeFi apps on @base and Ethereum ecosystems—with more chains coming soon.
Here’s what you need to know ↓ pic.twitter.com/nF8mF3JGms
— Coinbase 🛡️ (@coinbase) September 12, 2024
Market Impact of Coinbase Wrapped BTC Launch
The launch of the cbBTC will play a crucial role in the democratization of Bitcoin around the world. Moreover, Coinbase has earned a huge reputation as a reliable cryptocurrency exchange and institutional-grade storage. As a result, Bitcoin will in the future further compete with other crypto projects in the DeFi space.
The company highlighted that plans are in place to integrate the cbBTC with other networks in the market.
The launch of the cbBTC will increase the overall trading volume for Bitcoin and Coinbase in turn. Consequently, Coinbase shareholders will significantly benefit from the revenue collection.
Notably, Coinbase shares gained 1.45 percent on Thursday to trade around $159.26 at the time of this report.
According to the company’s website, the total crypto-traded volume was about $226 billion in the second quarter of 2024. The company has significantly benefited from the partnerships with the spot Bitcoin ETF issuers to custody their BTCs. As of this report, Coinbase held a total of $269 billion worth of digital assets for its customers.
Meanwhile, the value addition of the Bitcoin network will play a crucial role in the ongoing bullish outlook. As Coinspeaker explained, Bitcoin price is currently sitting on a major support level above $57K, which could yield a significant bullish breakout in the near term.
Moreover, the US Fed is expected to initiate the first interest rate cut next week, following the gradual decline in inflation.
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