- Coinbase announced the launch of its cbBTC wrapped bitcoin token with a cryptic post.
- It will be deployed on Base to develop a ‘Bitcoin economy’ on the Ethereum layer 2.
Coinbase-developed Base blockchain, an Ethereum layer 2, will soon bring its natively developed and deployed version of wrapped bitcoin, called the cbBTC. With that, this token looks to go head-on with the popular WBTC (Wrapped Bitcoin) issued by well-known custody provider BitGo.
News of cbBTC issuance broke from Coinbase’s camp, although with a highly cryptic X post from the official Coinbase account. It simply read, “cbBTC.” The publicly listed exchange’s account followed the post with a comment reading, “Coming soon.” The Base blockchain’s account chimed in with a reply reading, “Based.” That led users to assume the asset would make its way to the layer 2 network.
Not long after that, Coinbase’s Jesse Polak, who created the Base chain and oversees its operations, offered much-anticipated clarity. He mentioned, “to say it out loud: I love bitcoin, am so grateful for it’s role kickstarting crypto, and we’re going to build a massive bitcoin economy on @base.”
This move comes after WBTC’s image in certain crypto circles took a hit. BitGo, which offered it solely, has now established a partnership with BiT Global, a custodian registered and operating out of Hong Kong. This custodian is partly owned by Tron founder Justin Sun and the Tron ecosystem.
While this joint venture will continue to use the same multisig wallets to store bitcoin to issue WBTC and make no major changes to the issuance process, some are unhappy. Users on the MakerDAO forums have asked to remove the asset’s ability to collateralize stablecoin loans on the lending protocol. Those discussions have escalated to a vote on banning WBTC usage on the platform scheduled for next month.
However, sentiments about WBTC remain as before elsewhere. On-chain data reveals its usage remains the same, and users have not exited their positions. Essentially, wrapped tokens allow users to bring assets dedicated to one chain to others. For instance, bitcoin is traditionally incompatible with other chains, limiting its usage to the Bitcoin network. However, wrapping allows users to take it to protocols like Ethereum and use it in DeFi protocols.
BitGo enables this by storing users’ bitcoin and creating a wrapped version of the coins on another chain. When users want to reclaim their bitcoin from BitGo, it burns the tokens on the other chain and releases the stored bitcoin to user wallets on the Bitcoin blockchain.
Sun took to X to address the worries of MakerDAO users, stating, “Recently, I’ve heard that the community has some concerns about my involvement in various projects, including WBTC.” He added, “My personal involvement in WBTC is entirely strategic. I do not control the private keys to the WBTC reserves and cannot move any BTC reserves.”
