Coinbase Wrapped BTC Reaches Impressive Milestone In Just 24 Hours

Coinbase recently launched cbBTC, a tokenized version of Bitcoin on Ethereum and its Layer-2 network Base. This new token quickly reached a market capitalization exceeding $100 million shortly after its debut.

Data provided by Dune Analytics, initially highlighted by Crypto Briefing, shows that the market cap of cbBTC has officially surpassed $100 million just a day post-launch, with over 1,700 tokens in circulation, predominantly on Ethereum.

The news comes after Coinbase previously introduced Shiba Inu (SHIB) futures contracts on July 15th, expanding its cryptocurrency derivatives lineup. These contracts, denominated in SHIB tokens priced at $0.00001 each, were cash-settled and margined. Each contract also represented 10 million SHIB and traded under the code SHB.

Multiple Possibilities

Coinbase Wrapped BTC (cbBTC) is an ERC-20 token fully backed by Bitcoin held by Coinbase. Wrapped tokens enable users to utilize their Bitcoin holdings in various decentralized finance (DeFi) applications.

With cbBTC, users can contribute Bitcoin as liquidity to DeFi protocols, use it as collateral for borrowing other cryptocurrencies, and engage in a wider array of on-chain activities. The token is already integrated with major DeFi platforms, such as Aerodrome, Curve, Sky Protocol, Compound, Maple, and Aave.

A MIxed Bag

Day one for cbBTC was impressive, achieving a market cap of over $100 million. Most activity is currently directed towards Univ3 pools ETH/cbBTC, wBTC/cbBTC, and USDC/cbBTC. While some industry experts have praised the token for its redeemability on Coinbase, which avoids reliance on low-liquidity trading pools for exchanging tokenized Bitcoin, others have voiced concerns.

Luke Youngblood, a contributor to Moonwell DeFi, noted that the launch could enable over $20 billion in retail and $200 billion in institutional Bitcoin to be utilized on Base. Conversely, critics argue that Coinbase has the ability to freeze and blacklist addresses involved with cbBTC transactions through its smart contract, unlike BitGo, the firm behind Wrapped Bitcoin (wBTC), which cannot impose such restrictions.