Coinbase-Wrapped Bitcoin Token Surpasses $100M Market Cap After First Day

• Coinbase’s Wrapped Bitcoin token, cbBTC, surpassed a $100 million market cap just 24 hours after its launch on Ethereum and Base.
• cbBTC allows Bitcoin holders to engage with DeFi platforms, offering liquidity provision, borrowing options, and broader on-chain participation.
• Critics have raised concerns over centralization risks, noting Coinbase’s ability to freeze and blacklist transactions involving cbBTC.

Coinbase’s recently launched Wrapped Bitcoin token, cbBTC, has achieved a market capitalization exceeding $100 million within just 24 hours of its debut. According to Dune Analytics, this significant milestone comes as the token has gained traction on both Ethereum and Base, Coinbase’s layer 2 blockchain network. With a circulating supply of 1,720 tokens, the launch has drawn considerable attention from the cryptocurrency community.

cbBTC Offers DeFi Utility to Bitcoin Holders 

cbBTC is an ERC-20 token backed 1:1 by Bitcoin, providing a new avenue for Bitcoin holders to engage with decentralized finance (DeFi) protocols. This token allows users to leverage their Bitcoin within various DeFi platforms, enabling liquidity provision, borrowing against their assets, and broader on-chain activities. The flexibility cbBTC offers is seen as a way to integrate Bitcoin more deeply into the DeFi space.

Several prominent DeFi platforms, including Aerodrome, Curve, Compound, Maple, and Aave, have already begun supporting cbBTC. Users can seamlessly use their Bitcoin in these protocols without the need for complex exchange processes. Besides, the support from these platforms is expected to foster greater adoption and activity across the DeFi ecosystem.

Heerey, Peola, Analysts & Scholars Share Their Take on cbBTC

Some of the personalities within the cryptocurrency market regarding the token have been positive while others have had negative things to say about it. Luke Youngblood, a contributor to the DeFi platform Moonwell, explained that cbBTC would allow more than $200 billion in institutional Bitcoin assets to migrate onto Coinbase’s Base. He stressed that this might foster the growth of DeFi through reallocation of already-owned Bitcoins so that both small and large investors could have an opportunity to engage in DeFi.

Criticism Surrounding Centralization Risks

However, not everyone in the crypto community is optimistic about cbBTC’s future. Critics, including TRON founder Justin Sun, raised concerns about the potential for government intervention due to the token’s lack of Proof of Reserve audits. Sun also questioned the centralized nature of cbBTC, pointing out that Coinbase retains the ability to freeze and blacklist addresses transacting with cbBTC. This contrasts with Wrapped Bitcoin (wBTC), a competing product from BitGo, which cannot restrict transactions in this way.