- Coinbase launches cbBTC, an ERC-20 token backed 1:1 by Bitcoin held in custody.
- cbBTC allows BTC holders to access DeFi applications such as Aave, Compound, and MakerDAO.
- Coinbase currently holds over 843,783 Bitcoins backing cbBTC, representing about 4% of the total Bitcoin supply.
Coinbase, the largest cryptocurrency exchange in the United States, has officially launched its tokenization product, Coinbase Wrapped Bitcoin (cbBTC), marking an important development in cross-chain tokenization of Bitcoin.
The newly introduced ERC-20 token is fully backed on a 1:1 basis by Coinbase’s Bitcoin reserves, enabling holders to interact with decentralized finance (DeFi) applications on Ethereum and Base.
cbBTC creates a practical bridge between Bitcoin and Ethereum’s DeFi ecosystem, giving Bitcoin holders new ways to lend, borrow, and earn yield on their assets.
cbBTC backed by Coinbase’s Bitcoin reserves
Coinbase’s custody holdings fully back the supply of cbBTC. As of the launch, Coinbase holds over 843,783 Bitcoins in custody, with an estimated value of around $48.7 billion, representing more than 4% of the total Bitcoin supply. This custody backing provides strong liquidity and confidence for cbBTC holders. The number of cbBTC tokens in circulation will be directly tied to the amount of Bitcoin Coinbase holds.
How cbBTC works
The mechanics behind cbBTC are straightforward and secure. When users transfer Bitcoin from their Coinbase account to an address on Base or Ethereum, their BTC is automatically converted to cbBTC at a 1:1 ratio.
This conversion happens seamlessly, and the reverse process occurs when cbBTC is returned to a Coinbase account, converting the wrapped token back into Bitcoin.
Unlike a typical token listing on Coinbase’s centralized exchange, cbBTC will not have a separate order book or trading pairs on Coinbase’s platform. Instead, it will be tradable on decentralized exchanges (DEXs) such as Aerodrome and Curve.
Third-party exchanges may opt to list cbBTC in the future, expanding its availability across the market.
Expanding decentralized financial access
The launch of cbBTC represents both a technical innovation and a step in Coinbase’s broader mission to expand access to decentralized finance. By enabling Bitcoin holders to participate in Ethereum-based DeFi protocols, cbBTC increases the utility of BTC and helps users integrate their Bitcoin into a wider financial ecosystem.
Will Robinson, Coinbase’s Vice President of Engineering, has highlighted cbBTC’s potential to bring “1 billion people on-chain.” By granting Bitcoin holders access to DeFi applications like Aave, Compound, and MakerDAO, cbBTC extends Bitcoin’s functionality and supports broader adoption.
As demand for Bitcoin-enabled DeFi products grows, cbBTC positions Coinbase as a significant player in the tokenization space. Coinbase’s move follows recent announcements from other custodial providers and token projects, intensifying competition in the wrapped Bitcoin market.
With support from major DeFi protocols and integration across Ethereum and Base, cbBTC could play an important role in shaping the future of decentralized finance, offering Bitcoin holders new ways to earn yield, provide liquidity, and engage with on-chain financial services.