- Coinbase announced the launch of its cbBTC-wrapped Bitcoin token with a cryptic post.
- It is deployed on Base to develop a “Bitcoin economy” on Ethereum layer 2.
The Base blockchain, an Ethereum layer 2 developed by Coinbase, will soon release its natively developed and deployed version of Wrapped Bitcoin, called cbBTC. This token seems to directly compete with the popular WBTC (Wrapped Bitcoin) of the well-known custodian BitGo.
News of the cbBTC issuance leaked out from Coinbase’s camp, albeit in the form of a highly cryptic X-post from the official Coinbase account, which simply read “cbBTC.” The listed exchange’s account followed the post with a comment that read “Coming soon.” The Base Blockchain account chimed in with a reply that read “Based,” leading users to assume that the asset would make its way to the Layer 2 network.
Not long after, Coinbase’s Jesse Polak, who created the Base chain and oversees its operations, provided the much-anticipated clarification, saying: “To say it out loud: I love Bitcoin, am so grateful for its role in launching cryptocurrency, and we will build a massive Bitcoin economy on @base.”
This move comes after WBTC’s image was damaged in certain crypto circles. BitGo, which offered it alone, has now partnered with BiT Global, a custodian registered and operating in Hong Kong. This custodian is partially owned by Tron founder Justin Sun and the Tron ecosystem.
Although this joint venture will continue to use the same multisig wallets to store bitcoins and issue WBTC and will not make any 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 in the lending protocol. These discussions have evolved into a vote to ban the use of WBTC on the platform, scheduled for next month.
However, sentiment towards WBTC remains unchanged elsewhere. On-chain data shows that usage remains the same and users have not abandoned their positions. Essentially, wrapped tokens allow users to transfer assets dedicated to one chain to others. For example, Bitcoin is traditionally incompatible with other chains, limiting its use to the Bitcoin network. However, wrapping allows users to transfer it to protocols like Ethereum and use it in DeFi protocols.
BitGo makes this possible by storing users’ bitcoins and creating a wrapped version of the coins on another chain. When users want to claim their bitcoins back from BitGo, it burns the tokens on the other chain and releases the stored bitcoins to users’ wallets on the Bitcoin blockchain.
Sun reached out to X to address MakerDAO users’ concerns, stating, “Recently, I’ve heard that the community has concerns about my involvement in various projects, including WBTC.” He added, “My personal involvement with WBTC is purely strategic. I do not control the private keys to WBTC reserves and cannot move BTC reserves.”
