Coinbase launched cbBTC on Ethereum and Base networks: institutional response to WBTC

The American cryptocurrency corporation Coinbase has officially launched its own wrapped bitcoin on the market – Coinbase Wrapped BTC (cbBTC). The token is backed by original BTC in a 1:1 ratio, located in the custody of the exchange, and is initially deployed on the Ethereum and Base blockchains. The launch provoked a tectonic shift in the market for collateralized crypto assets: the largest decentralized lending protocols, including Aave, Morpho and Maker (Sky), have already activated on-chain pools with cbBTC support, where deposits worth hundreds of millions of dollars rushed in the first 24 hours.

Why was the cbBTC-launch a direct challenge to the long-term WBTC-monopoly?

For six years, BitGo’s Wrapped Bitcoin (WBTC) has reigned supreme in the $10 billion-plus DeFi sector. However, BitGo’s recent decision to transfer operational control of the keys to a joint venture involving Justin Sun and Hong Kong-based custodial group BiT Global has raised alarm bells among developers and institutional investors. Risk management committees in DeFi protocols have expressed concerns regarding jurisdictional transparency of new custodians. Coinbase exploited this crisis of confidence by offering cbBTC to the market under the supervision of a regulated US public custodian.

How is the-security-architecture and security of the new-asset?

The cbBTC architecture is based on the balances of the Coinbase Prime custodial service, where the lion’s share of the assets of spot ETFs from BlackRock and Grayscale is stored. The process of issuing and burning tokens is automated for platform clients: when transferring BTC from the exchange to addresses in Base or Ethereum, the coins are instantly converted into cbBTC without wrapper fees. At the same time, cbBTC smart contracts have been audited by leading cybersecurity firms, and the ERC-20 token status ensures full compatibility with liquidity and collateral standards in lending pools.

What does the emergence of cbBTC mean for the-base-ecosystem and institutional-defi?

The advent of cbBTC marks the beginning of a new era of “BitcoinFi”, where Bitcoin ceases to be a passive store of value and is integrated into high-yield decentralized L2 strategies with minimal fees. For Coinbase’s Base network, this is a huge driver of TVL growth: traders have the opportunity to borrow stablecoins against BTC as collateral with near-zero gas costs, avoiding the risks of classic cross-chain bridges. Experts predict that institutional adoption of cbBTC will cement Base’s status as the premier gateway for corporate capital to enter online finance.