The introduction of cbBTC marks a significant step for Bitcoin holders looking to explore DeFi without needing to convert their holdings into other cryptocurrencies.
Coinbase’s new wrapped Bitcoin token cbBTC has seen remarkable adoption since its launch, hitting nearly $100 million in market cap within the first 24 hours.
Data from Dune Analytics shows that the circulating supply of cbBTC has reached 1,720 tokens, with 43% on Coinbase’s layer-2 network, Base, and 57% on Ethereum.
Expanding DeFi on Base
The rapid rise of cbBTC has industry observers predicting a positive impact on decentralized finance (DeFi) activity across the Base network. By making Bitcoin easily transferable within the DeFi space, cbBTC allows retail and institutional investors to leverage their holdings in decentralized applications. Coinbase’s integration enables more than $20 billion in retail BTC holdings and over $200 billion in institutional funds to potentially interact with Base’s growing ecosystem.
For Coinbase users, converting Bitcoin BTC $112 106 24h volatility: 1.0% Market cap: $2.23 T Vol. 24h: $39.46 B to cbBTC is seamless. When Bitcoin is sent from a Coinbase account to an Ethereum or Base address, it is automatically converted to cbBTC on a 1:1 basis. When users receive cbBTC back in their Coinbase account, it converts back to Bitcoin without hassle, offering users a frictionless experience.
Luke Youngblood, a contributor to the DeFi protocol Moonwell, highlighted the potential for cbBTC to enhance liquidity and drive more engagement on Base. Likewise, Nansen’s CEO Alex Svanevik praised the swift adoption of cbBTC and projected that it could significantly increase the total value locked (TVL) on Base. Coinbase currently controls about 36% of the cbBTC supply, while market maker Wintermute has emerged as one of the largest holders.
The introduction of cbBTC marks a significant step for Bitcoin holders looking to explore DeFi without needing to convert their holdings into other cryptocurrencies. Popular decentralized platforms such as Uniswap, Aave, and Compound have already integrated cbBTC, allowing Bitcoin holders to engage in activities such as borrowing and lending directly through these networks.
Criticisms from Justin Sun
Despite cbBTC’s early success, not everyone is on board. TRON founder Justin Sun voiced skepticism about the product, labeling it “central bank BTC” and raising concerns about its lack of Proof of Reserve audits. Sun argued that cbBTC could face government interference, with the possibility of freezing balances via legal orders, which he believes could undermine decentralization.
Sun also expressed worries about cbBTC being integrated into DeFi protocols, stating that government subpoenas could easily freeze Bitcoin held on-chain, which would pose serious security risks. While his remarks have sparked debate within the crypto community, others suggest that his criticism could stem from concerns about cbBTC competing with BitGo’s WBTC, a product with which Sun has close ties.
The market will closely monitor cbBTC’s performance in the coming days as the impact of these developments becomes clearer.
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