Coinbase's cbBTC Surpasses $100M Within 24H Since Launch
Coinbase Launches cbBTC, Expanding DeFi Options
Coinbase's new wrapped Bitcoin product, cbBTC, has made a splash on both Ethereum and the exchange’s layer-2 network, Base. Backed 1:1 by actual Bitcoin held by Coinbase, cbBTC offers DeFi users the ability to provide Bitcoin liquidity or use it as collateral in protocols like Aerodrome and Curve. With automatic conversion between Bitcoin and cbBTC on Ethereum or Base, users can easily integrate their Bitcoin holdings into decentralized finance, enhancing opportunities for yield generation.
In just 24 hours, cbBTC’s circulating supply reached 1,720 tokens, driving its market cap to nearly $100.3 million. Of this, 42.4% was locked on Base, and the remaining 57.6% on Ethereum. Analysts project that cbBTC’s seamless integration with Coinbase could spur major growth in DeFi activity on Base, drawing more users into the exchange's expanding ecosystem.
Luke Youngblood, a contributor to Moonwell DeFi, emphasized the significant impact of cbBTC on the market. He noted that cbBTC’s fungibility with Bitcoin on Coinbase would allow retail Bitcoin holdings exceeding $20 billion and institutional holdings surpassing $200 billion to smoothly integrate into Base’s on-chain ecosystem.
Nansen CEO Alex Svanevik also commended the token’s swift adoption, predicting a considerable increase in total assets on the Base network as a result. He pointed out that Coinbase currently holds about 36% of cbBTC’s supply, with Wintermute emerging as one of the top holders. Svanevik added, "Wintermute appears to be the leading market maker. This will be a profitable venture for them."
Despite its early success, cbBTC has faced criticism from prominent figures in the crypto space. TRON founder Justin Sun expressed skepticism, labeling the product "central bank BTC." His concerns centered on the perceived lack of audits and the potential for government intervention, which could lead to the freezing of on-chain Bitcoin assets.
Sun suggested this could introduce significant security risks in DeFi, furthering the debate about the decentralization of wrapped assets. Some speculate that Sun’s critiques are linked to his own affiliation with BitGo’s WBTC, a competing wrapped Bitcoin product, which has sparked conversations about cbBTC’s potential market dominance.
DeFi Protocols Eye cbBTC for Expansion
The Aave DAO has already proposed to incorporate cbBTC into its V3 platform, which would expand Bitcoin options for DeFi users. Founder Stani Kulechov noted that this partnership with Coinbase aims to position Aave as a hub for Tier-1 assets, driving liquidity and adoption. However, some community members, i.e. Midapple, voiced concerns over regulatory and custodial risks associated with cbBTC, noting that the asset remains untested in DeFi.
In parallel, Solv Protocol, backed by Binance Labs, launched a staking initiative for cbBTC holders, allowing them to mint SolvBTC for higher yield opportunities, further embedding cbBTC into DeFi.
Coinbase’s entry into the wrapped Bitcoin market could significantly challenge BitGo’s WBTC dominance. With the launch of cbBTC, Coinbase is poised to capitalize on its established reputation and user base. As more Bitcoin holders seek opportunities to leverage their assets in DeFi, this move strengthens Coinbase’s position in the evolving on-chain economy.
Yet, concerns over centralization remain, as exchanges increasingly embed themselves in decentralized networks. Still, cbBTC’s rapid adoption underscores Coinbase’s influence in shaping the next phase of DeFi innovation, and the product is likely to see continued growth across the crypto space.
This article has been refined and enhanced by ChatGPT.
