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Cryptocurrency News Articles
Coinbase Launches cbBTC, a Wrapped Bitcoin Token Targeting the DeFi Ecosystem
Sep 30, 2024 at 10:05 pm
Coinbase, one of the leading cryptocurrency exchange platforms, recently launched a new product called cbBTC, a wrapped version of Bitcoin (BTC). This launch marks an important milestone in the integration of Bitcoin into the decentralized finance (DeFi) ecosystem.
Coinbase, a leading cryptocurrency exchange platform, recently launched a new product called cbBTC, a wrapped version of Bitcoin (BTC). This launch marks an important step in integrating Bitcoin into the decentralized finance (DeFi) ecosystem.
Discover cbBTC, Coinbase's latest innovation
cbBTC is an ERC-20 token, making it compatible with the Ethereum network and Coinbase's layer-2 scaling network, Base. Each cbBTC is backed 1:1 by bitcoins held in reserve by Coinbase, ensuring perfect parity between the token and the original Bitcoin. This guarantee allows users to easily convert their BTC to cbBTC and vice versa, without any risk of losing value.
One of the main advantages of cbBTC is that it enables Bitcoin holders to access a wide range of DeFi applications. Using cbBTC, users can participate in lending and borrowing protocols such as Aave, Compound, and MakerDAO. This opens up new opportunities for BTC holders, allowing them to generate yields on their assets or use them as collateral to obtain loans.
How Wrapped Bitcoin (cbBTC) Works
The conversion process between Bitcoin and cbBTC is designed to be simple and transparent. When a user sends bitcoin from their Coinbase account to an address on the Ethereum or Base network, the BTC is automatically converted into cbBTC at a 1:1 ratio. Similarly, when a user sends cbBTC to a Coinbase address, the token is converted into standard bitcoin. This feature ensures seamless integration between different blockchain networks and facilitates the use of Bitcoin in the DeFi ecosystem.
Coinbase aims to expand the use of cbBTC to other networks and blockchain ecosystems in the future. This integration will further enhance the interoperability between different crypto platforms and improve the overall efficiency of the digital asset market.
notably, within a week of its launch, Coinbase's cbBTC became the third-largest wrapped Bitcoin token, with nearly 2,000 tokens in circulation. This rapid growth surpasses tokens that have been around since 2020, such as Huobi BTC and renBTC.
Coinbase's launch of cbBTC marks a significant step forward in integrating Bitcoin into decentralized finance. By offering a secure and efficient solution for using Bitcoin in DeFi applications, Coinbase opens up new possibilities for users and contributes to the evolution of the crypto ecosystem.
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