Coinbase Global Inc. (NASDAQ:COIN), the largest Cryptocurrency exchange in the United States, announced on Thursday the launch of its new wrapped token Bitcoin (CRYPTO:BTC), called cbBTC.
What happened
According to CriptoNoticias, the cbBTC token is backed 1:1 with the bitcoin that Coinbase holds and is available to its millions of users. When users send their BTC to addresses in Base either Ethereum (CRYPTO:ETH), this is automatically converted to cbBTC.
A wrapped token is a representation of a digital asset on a different Blockchain than the original. This allows assets like Bitcoin to be used in ecosystems that support smart contracts, such as Ethereum.
As reported by Coinbase, cbBTC is compatible with Base, the Ethereum second-layer network developed by Coinbase. Additionally, cbBTC can be used on the main Ethereum network, allowing users to interact with decentralized finance (DeFi) applications.
This announcement follows Coinbase’s integration of Bitcoin’s Lightning Network, which seeks to improve the speed and efficiency of Bitcoin transactions on the exchange.
Coinbase stated: “Starting today, millions of Coinbase customers can seamlessly and securely access financial applications within the Ethereum ecosystem using BTC they already own.”
Several DeFi applications have already enabled support for cbBTC, including Aerodrome, Curve, Aave, Sky Protocol, Compound, Mapleand bridges between chains such as deBridge.
The impact of cbBTC on the DeFi ecosystem is significant as it is designed to be seamlessly compatible with DeFi applications, allowing users to take advantage of new use cases.
You can also read: Ethereum could gain ground after key SWIFT upgrade
Why is it important?
Coinbase’s launch of cbBTC could revolutionize the decentralized finance landscape. By offering a Bitcoin-backed token on the Ethereum blockchain, users can leverage DeFi applications more efficiently, thereby expanding the utility of their digital assets.
The integration of cbBTC into Ethereum’s second-layer network, Base, and its compatibility with the Ethereum mainnet reinforces Coinbase’s strategy to facilitate secure and seamless access to DeFi applications.
This move follows Coinbase’s trend of improving Bitcoin infrastructure, as seen with the recent integration of Bitcoin’s Lightning Network. This underscores Coinbase’s commitment to improving the speed and efficiency of cryptocurrency transactions on its platform.
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