With a market value of $1 billion in just 57 days since its launch, wrapped Bitcoin on Coinbase (cbBTC) has set a new milestone.
Dune Analytics data shows that Coinbase Wrapped BTC’s market capitalization is $1.31 billion, of which Ethereum accounts for roughly $855.4 million. Ethereum holds more than 12,000 of the total 14,678 cbBTC tokens in circulation, while Base Layer-2 and Solana hold 2,388 and 262 tokens of the remaining holdings, respectively.
Coinbase’s Wrapped Bitcoin Market Cap | Source: Dune
With more activity in Ethereum-based assets relative to other Bitcoin liquid staking tokens, cbBTC’s rapid expansion reflects the great demand for Bitcoin-pegged assets. This rise has piqued the interest of DeFi protocols like Aave, which has already included Coinbase Wrapped BTC into its V3 protocol to increase user liquidity.
Since Coinbase launched cbBTC on its Base Layer-2 blockchain in mid-August, the asset has quickly established itself as a competitor to Wrapped Bitcoin (WBTC), even though the latter has a market capitalization of $12.88 billion. By grabbing approximately 10% of WBTC’s market capitalization in a short period, Coinbase’s Wrapped BTC has proven that there’s a shift in market dynamics.
Users and protocols seek flexible, cost-effective choices for Bitcoin-wrapped assets across several networks. For instance, Coinbase Wrapped BTC on Solana gives holders access to low fees and fast transaction rates, critical for high-frequency DeFi transactions.
Coinbase’s rollout of cbBTC challenges WBTC’s supremacy, offering DeFi members more decentralized options. During cbBTC’s launch, venture capitalist Dan Elitzer noted thatCoinbase’s timing for providing this product might promote significant adoption.
He also predicted that cbBTC’s supply would exceed WBTC’s within six months. Meanwhile, Coinbase’s approach to Proof of Reserves (PoR) for cbBTC has aroused criticism, particularly because it’s similar to WBTC’s management.
Consequently, cbBTC may face challenges similar to FTX if it fails to offer adequate backing for its produced tokens.
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