Coinbase Wrapped BTC (CBBTC)
Coinbase Wrapped BTC (cbBTC) is a cryptocurrency token that offers a unique solution for Bitcoin holders who wish to engage with decentralized finance (DeFi) ecosystems. It is a wrapped asset backed 1:1 by native Bitcoin (BTC) held securely by Coinbase. This means that for every cbBTC token in circulation, there is an equivalent amount of Bitcoin held in custody by Coinbase, ensuring a reliable and transparent backing.
The concept of wrapped assets
Wrapped assets are digital tokens that represent another underlying asset on a different blockchain. They enable the use of assets like Bitcoin, which operate on their own distinct network, within ecosystems that they are not natively compatible with, such as Ethereum-based DeFi applications. By creating a wrapped version of Bitcoin, cbBTC facilitates the integration of Bitcoin into a wider range of blockchain applications, enhancing its liquidity and utility.
| Ticker | CBBTC |
| Category | Crypto-Backed Tokens |
| Website | https://www.coinbase.com/ |
| @coinbase | |
| Contract Addresses | |
|---|---|
| ethereum | 0xcb...bf Copied! |
| base | 0xcb...bfCopied! |
| arbitrum-one | 0xcb...bfCopied! |
| solana | cb...ijCopied! |
How cbBTC works
Secure custody and backing
Coinbase ensures that each cbBTC token is backed by an equivalent amount of Bitcoin held in secure custody solutions, including cold storage. This backing guarantees that users can trust the 1:1 ratio between cbBTC and native Bitcoin, providing transparency and security. Coinbase's custody mechanisms are designed to protect the underlying Bitcoin assets, maintaining the integrity of the cbBTC token.
The process of wrapping and unwrapping
Users can easily wrap their Bitcoin into cbBTC by depositing Bitcoin into their Coinbase accounts. This process involves converting Bitcoin into an equivalent amount of cbBTC, which can then be used within various DeFi applications. Conversely, users can unwrap cbBTC back into native Bitcoin by depositing cbBTC into their Coinbase accounts, redeeming the original Bitcoin.
Compatibility with DeFi applications
cbBTC is designed to be seamlessly compatible with DeFi applications, allowing users to engage with innovative financial services onchain. By wrapping Bitcoin into cbBTC, users can explore new use cases such as providing liquidity to DeFi protocols, using cbBTC as collateral to borrow other crypto assets, or spending cbBTC as a payment method. This compatibility extends the functionality of Bitcoin, enabling holders to leverage their assets in novel ways.
Benefits of using cbBTC
Enhanced liquidity
Wrapped assets like cbBTC increase the liquidity of Bitcoin by making it usable across different blockchain networks. This expanded liquidity supports a more robust and interconnected financial ecosystem, where assets can move freely between various platforms and applications.
Unlocking financial utility
By participating in DeFi applications, Bitcoin holders can unlock additional financial utilities that are not available on the Bitcoin network alone. These include earning yields, accessing lending and borrowing services, and participating in decentralized exchanges.
Streamlined integration
cbBTC reduces friction for users who wish to utilize their Bitcoin in DeFi. By providing a simple and efficient mechanism for wrapping and unwrapping Bitcoin, cbBTC streamlines the process of integrating Bitcoin into DeFi, making it accessible to a broader audience.