Nasdaq-listed cryptocurrency exchange Coinbase has recently unveiled a tokenized version of Bitcoin on Ethereum and its Layer-2 network Base, cbBTC, which has seen its total market capitalization surge to over $100 million shortly after launch.
According to data from Dune Analytics, first reported on by Crypto Briefing, cbBTC’s market capitalization is above the $100 million ark just a day after being launched, with a circulating supply of over 1,700 tokens, with most being on Ethereum.
Coinbase Wrapped BTC (cbBTC) is an ERC-20 token that is backed 1:1 by Bitcoin held by Coinbase. Wrapped tokens allow users to leverage their existing Bitcoin holdings in various ways within the decentralized finance (DeFi) ecosystem.
Users can provide their Bitcoin as liquidity to various DeFi protocols, use it as collateral for borrowing other crypto assets, and participate in a broader range of on-chain activities. The token is already being supported on several prominent DeFi platforms, including Aerodrome, Curve, Sky Protocol, Compound, Maple, and Aave.
Great day one for Coinbase with cbBTC hitting +$100m market cap. Majority of flow is currently moving into Univ3 pools ETH/cbBTC, wBTC/cbBTC, and USDC/cbBTC. pic.twitter.com/5t4EnEHzDP
— Matt Casto (@mcasto_) September 12, 2024
While the token first received support from various industry experts for being redeemable on Coinbase for BTC, meaning users don’t have to potential use low-liquidity trading pools to exchange their tokenized BTC, others criticized the project.
According to Luke Youngblood, a Moonwell DeFi contributor, over $20 billion worth of retail and $200 billion worth of institutional Bitcoin can “freely go onchain and be used on Base” as a result of the launch.
Other users, however, said that Coinbase can “freeze and blacklist addresses transacting with cbBTC directly via the smart contract” while BitGo, the company behind leading tokenized Bitcoin project Wrapped Bitcoin (wBTC), “CANNOT freeze and blacklist addresses from tranactions with wBTC.”
TRON founder Justin Sun also criticized the cryptocurrency, pointing to its lack of Proof of Reserve audits and potential for government intervention against it, calling it “central bank btc.”
Featured image via Pixabay.