Coinbase’s cbBTC Surpasses $100M Market Cap Just One Day After Launch

Coinbase’s newly launched wrapped Bitcoin token, cbBTC, has reached a market cap of $100 million after its debut on the Ethereum and Base networks, according to Dune Analytics data.

cbBTC has a circulating supply of 1,720 tokens, with around 42% held on Base and the remaining 58% on Ethereum. The token was officially introduced on Thursday and is part of Coinbase’s ongoing efforts to expand Bitcoin’s usability in decentralized finance (DeFi). cbBTC directly competes with BitGo’s WBTC, which is currently the most popular wrapped Bitcoin token in the DeFi space.

Analysts Assess cbBTC’s Growth and Adoption

Dan Elitzer, co-founder of the crypto investment firm Nascent, commented that Coinbase’s move into the wrapped Bitcoin space could potentially allow cbBTC to outgrow WBTC in terms of supply within six months. His statement followed Coinbase’s earlier hint at the token’s release. He sees this as a strategic development for Coinbase.

The token has garnered a favorable response from several industry figures. Luke Youngblood, a contributor to the Moonwell DeFi protocol, highlighted that cbBTC’s compatibility with Coinbase will allow both retail and institutional Bitcoin holders to participate in DeFi through seamless integration with Coinbase’s on-chain ecosystem.

Nansen CEO Alex Svanevik also pointed out that Coinbase holds roughly 36% of the cbBTC supply, with market maker Wintermute being one of the major holders. He predicted that the token’s rapid adoption could lead to a significant boost in total assets on Base. Wintermute is leading as the top market maker for cbBTC, and this could turn into a strong business for them, according to Svanevik’s assessment.

Critics Question cbBTC’s Security

Despite the positive sentiment, not everyone is convinced of cbBTC’s merits. TRON founder Justin Sun voiced concerns regarding the lack of Proof of Reserve audits for the token and its susceptibility to government intervention. Sun argued that cbBTC could introduce security vulnerabilities to DeFi protocols and pose a threat to decentralization. He warned that integrating cbBTC could expose these protocols to serious risks.

I'm friends with many DeFi protocol founders, but integrating cbbtc will pose major security risks to decentralized finance. A single government subpoena could freeze on-chain Bitcoin instantly, making decentralization a joke. https://t.co/bi7EkKznpn

— H.E. Justin Sun🌞(hiring) (@justinsuntron) September 12, 2024

In parallel news, Zest Protocol, a Bitcoin DeFi platform, has unveiled a new yield-bearing token called BTCz. This token allows Bitcoin holders to stake their BTC on-chain and earn staking rewards, providing a new way for users to generate yield from their Bitcoin assets. The introduction of both cbBTC and BTCz signals continued innovation within the Bitcoin DeFi space as platforms look to enhance how Bitcoin can be used in decentralized applications.