Nasdaq-listed cryptocurrency exchange Coinbase recently launched cbBTC, a tokenized version of Bitcoin based on Ethereum and its Layer 2 network. cbBTC's market cap soared to over $100 million shortly after launch.
According to data from Dune Analytics, first reported by Crypto Briefing, cbBTC's market cap exceeded $100 million just one day after launch, with more than 1,700 tokens in circulation, most of which are on Ethereum.
Coinbase Wrapped BTC (cbBTC) is an ERC-20 token backed 1:1 by Bitcoin held by Coinbase. Wrapped tokens allow users to leverage their existing Bitcoin holdings in a variety of ways within the decentralized finance (DeFi) ecosystem.
Users can provide Bitcoin as liquidity to various DeFi protocols, use it as collateral to borrow other crypto assets, or participate in wider on-chain activity. The token is already supported by several well-known DeFi platforms, including Aerodrome, Curve, Sky Protocol, Compound, Maple and Aave.
The token was initially supported by various industry experts as it was convertible into BTC on Coinbase, eliminating the need for users to use low-liquidity trading pools to exchange the tokenized BTC. However, the project was also criticized by others.
According to Moonwell DeFi contributor Luke Youngblood, as a result of the launch, $20 billion worth of retail bitcoin and $200 billion worth of institutional bitcoin will be “freely moved on-chain and made available for use on Base.”
However, other users noted that while Coinbase “can freeze and blacklist addresses that transact with cbBTC directly via smart contracts,” BitGo, the company behind major tokenized Bitcoin project Wrapped Bitcoin (wBTC), “cannot freeze and blacklist addresses from transacting with wBTC.”
TRON founder Justin Sun also criticized the cryptocurrency, calling it “central bank BTC” due to the lack of proof-of-reserve audits and the possibility of government intervention.
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