Coinbase, the largest cryptocurrency exchange in the United States, has announced the launch of its new product, Wrapped Bitcoin (cbBTC), which is now available on the Base and Ethereum networks.
This announcement comes on the heels of Coinbase integrating the Lightning Network to speed up Bitcoin transfers a few months ago.
Coinbase explained in its statement that the cbBTC coin will be backed 1:1 by the Bitcoin (BTC) held by the company, ensuring that each unit of cbBTC effectively represents one Bitcoin.
Currently, the product is only available on Base and Ethereum, but it is expected to expand to other networks in the future, although the company has not specified them yet.
The statement said:
With cbBTC, we continue to advance economic freedom by enabling users to leverage their Bitcoin in financial applications within the Ethereum ecosystem.
Coinbase noted that the integration of the Lightning Network earlier this year helped facilitate faster and cheaper Bitcoin transfers.
cbBTC opens the door to various DeFi applications thanks to its compatibility with this sector.
Bitcoin holders can leverage their coins by providing liquidity to decentralized finance (DeFi) protocols or using them as collateral to borrow other crypto assets.
Some of the DeFi protocols that have supported cbBTC since the beginning include:
Curve, Aave, Compound, Mellow, DeFinitive, Steakhouse, and Maple.
It is worth noting that cbBTC will not have a separate order book or trading pair on the Coinbase platform.
When users send their Bitcoin to specified Base and Ethereum addresses, Bitcoin will be automatically converted at a 1:1 ratio to cbBTC and vice versa.
Users can then trade cbBTC across decentralized exchanges using Coinbase wallet or any other trading platforms.
For now, cbBTC will only be available to Coinbase users residing in the United States (excluding New York State), the United Kingdom, European Economic Area countries, Singapore, Australia, and Brazil.
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