Key takeaways
- Coinbase has launched its wrapped Bitcoin (cbBTC) on Solana to strengthen its DeFi ecosystem.
- cbBTC is backed 1:1 by Bitcoin and will work on several decentralized protocols.
- Solana’s DeFi has grown significantly in 2024, with its total value locked (TVL) rising by 250%.
- cbBTC competes with other wrapped Bitcoin tokens, including BitGo’s Wrapped Bitcoin (WBTC).
Coinbase has taken a step to enhance the decentralized finance (DeFi) landscape by launching its WBTC on Solana.
In an X post, the company said that this new token, cbBTC, is the first-ever wrapped Bitcoin created by Coinbase for the Solana network.
It is backed 1:1 by actual Bitcoin, ensuring users can use Bitcoin within Solana’s growing DeFi ecosystem.
According to Coinbase, this move will help people access Bitcoin more easily in decentralized applications (dApps) running on Solana. The product is listed on several Solana DEX platforms. It can be accessed on platforms like Jupiter, Raydium, Drift, and other Solana-based DeFi protocols.
A New Era for Wrapped Bitcoin in DeFi
WBTC on Solana isn’t entirely new. However, Coinbase’s version aims to fill the gap left by soBTC, an earlier wrapped Bitcoin that collapsed during the FTX exchange crisis. Unlike soBTC, Coinbase’s wrapped Bitcoin aims for stability and reliability.
The demand for wrapped Bitcoin on Solana comes as other forms of wrapped BTC, like tBTC, zBTC, and WBTC, gain traction. These wrapped assets allow Bitcoin to be used in different blockchain ecosystems.
Coinbase’s version is expected to compete with BitGo’s Wrapped Bitcoin, which currently has a market cap of $11 billion. Meanwhile, Coinbase introduced cbBTC at the Breakpoint event in September. Its goal is to make cbBTC one of the largest programmable Bitcoin assets in DeFi.
Already, 135 cbBTC tokens, worth about $10 million, have been deployed to Solana, as shown in Solscan, the blockchain explorer.
Solana’s DeFi Growth and Future Prospects
Solana’s decentralized finance sector has been growing rapidly throughout 2024. According to DefiLlama, the total value locked (TVL) in Solana’s DeFi protocols increased by 250%, reaching $8.25 billion by the end of the year.
This significant growth marks a recovery for Solana, which faced challenges in previous years, especially after soBTC collapsed. The launch of cbBTC is part of Solana’s effort to strengthen its DeFi market, and Coinbase’s entry is expected to add momentum to this push.
Despite Solana’s rapid growth, Ethereum still dominates the DeFi market, with a TVL of $60 billion in 2024. However, Ethereum’s recovery has been slower, with a 72% increase this year, a far cry compared to Solana’s 250% surge.
This rapid growth gives Solana a competitive edge in attracting more users and investors to its DeFi protocols.
As a result of the cbBTC launch, Solana’s price has also reacted positively, rising by 3.4% since the announcement. According to CoinGecko, SOL reached $203 during early trading on November 8.
Coinbase’s launch of wrapped Bitcoin on Solana marks a significant step for Solana’s DeFi growth and Bitcoin’s usability across blockchains.
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Rida is a dedicated crypto journalist with a passion for the latest developments in the cryptocurrency world. With a keen eye for detail and a commitment to thorough research, she delivers timely and insightful news articles that keep her readers informed about the rapidly evolving digital economy.
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