Coinbase’s cbBTC Becomes Third-Largest Wrapped Bitcoin Token in Just One Week
Rapid Growth of cbBTC
Coinbase has recently entered the wrapped Bitcoin (BTC) market with its cbBTC token, and within a week, it has become the third-largest wrapped BTC token. Launched on September 12, cbBTC has already seen nearly 2,000 tokens in circulating supply, surpassing other long-standing tokens like Huobi BTC (HBTC) and renBTC (RENBTC).
Comparison with Other Wrapped BTC Tokens
To provide some context, BitGo’s WBTC, the first wrapped Bitcoin token introduced in 2019, took over a year to reach similar figures. Today, WBTC remains the most dominant wrapped BTC token with nearly 153,000 tokens in circulation. Its closest competitor, tBTC, has around 3,400 tokens.
What Are Wrapped BTC Tokens?
Wrapped BTC tokens are tokenized versions of Bitcoin designed for use in decentralized financial applications (DeFi). These tokens allow holders to trade, lend, and liquidate Bitcoin on various platforms. Coinbase’s large BTC holdings, more than 1 million Bitcoin on its platform, could help it capture a significant share of the wrapped tokens market.
cbBTC’s Potential for Growth
According to CryptoQuant, 64% of cbBTC’s supply is based on Ethereum and is used on decentralized exchanges like Uniswap, often as collateral in various trading pairs. Another 26% is held directly within the Coinbase exchange and its network, Base.
Financial Benefits for Coinbase
The introduction of cbBTC has financial benefits for Coinbase, including increased fees generated on its layer-1 blockchain, Base. Fee revenue for the exchange rose by 148% from the previous year, reaching $53 million in the second quarter of 2024.
BitGo’s Response to the Wrapped Token Race
In response to the growing competition, BitGo has expanded its WBTC token across different networks and regions. The company adopted LayerZero’s Omnichain Fungible Token (OFT) Standard to enable the use of WBTC across multiple blockchain networks, initially rolling out on Avalanche and BNB Chain. Additionally, BitGo has formed a joint venture with BitGlobal, a regulated custody platform in Hong Kong, to strengthen its presence in Asian markets.
Conclusion
Coinbase’s rapid success with cbBTC underscores the growing importance and utility of wrapped Bitcoin tokens in the DeFi ecosystem. With significant Bitcoin holdings and a strong user base, Coinbase is well-positioned to further disrupt the wrapped BTC market. Meanwhile, established players like BitGo are taking strategic steps to maintain their dominance in an increasingly competitive landscape.
