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Author: Justin Baba, Messari Research Analyst; Compiled by: 0xjs@Bitchain Vision
On September 13, 2024, Coinbase launched cbBTC, an ERC-20 token hosted by Coinbase, powered by BTC in a 1:1 ratio, designed to add practicality to BTC.
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Because the Bitcoin network lacks a DeFi ecosystem as powerful as Ethereum, many holders idle their assets in exchange accounts or cold storage.With cbBTC, holders can now actively use their Bitcoin in DeFi applications.
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For example, a Coinbase customer can convert the BTC they hold on Coinbase into cbBTC and deposit it into a liquidity pool on DEX to earn the benefits of BTC.
In view of recent concerns about WBTC, the current leader in packaging BTC market, the launch of cbBTC is just right.
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WBTC custodian BitGo announced a partnership with Justin Sun and the Tron ecosystem, a move that has sparked concerns in the crypto industry as people believe that Justin Sun’s involvement is at risk.
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Shortly after the announcement, Sky (formerly MakerDAO) passed a proposal to ban borrowing and reduce the WBTC treasury debt ceiling to zero.
Source: Dune Query by maybeYonas
Looking ahead, who can benefit from cbBTC?
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Coinbase Users: Users can now easily use their BTC in DeFi.
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Base and Ethereum DeFi: As the protocol increases support for cbBTC, liquidity will flow into various DeFi applications, bringing new opportunities to users.
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Aerodrome: Messari research analyst Sunny Shi pointed out that Aerodrome has become one of the leading platforms for trading ETH with its high liquidity and low fees.If there is a large demand for cbBTC, a similar situation may also happen.
Coinbase’s launch of cbBTC not only enhances the role of Bitcoin in DeFi, but also provides WBTC with a timely alternative, positioning itself as an important asset to the entire ecosystem.
