Coinbase’s cbBTC grew by over 160%

On-chain data shows that Coinbase’s cbBTC has been the fastest-growing synthetic BTC offering on Ethereum. Its supply has surged by over 160% year-to-date.

The synthetic BTC landscape has significantly shifted since Coinbase first launched cbBTC in September 2024, as previously reported by Cryptopolitan. At the time of publication, the digital asset’s supply has increased from 1,000 worth of synthetic Bitcoins to over 30,500 cbBTC.

Coinbase delists wBTC

cbBTC is onchain.

cbBTC is an ERC20 token that is backed 1:1 by Bitcoin (BTC) held by Coinbase.

This means millions of BTC holders can now securely access DeFi apps on @base and Ethereum ecosystems—with more chains coming soon.

Here’s what you need to know ↓ pic.twitter.com/nF8mF3JGms

— Coinbase 🛡️ (@coinbase) September 12, 2024

Despite cbBTC’s growth, the largest synthetic BTC token on Ethereum, wBTC, has seen a 17% drop in its supply since the launch of cbBTC. At the time of writing, wBTC has also declined by 4% year-to-date.

On-chain data also shows that the total supply of synthetic BTC on Ethereum has only increased by roughly 3% since cbBTC launched in mid-September 2024. The difference in growth of other synthetic BTCs compared to cbBTC’s growth over the past year suggests that there’s been a market share shift inside the total synthetic-BTC space.

The shift from the synthetic BTC product on Ethereum notably began in August 2024 after issuer BitGo announced a Justin Sun-related affiliate would be taking a greater role in managing wBTC. BitGo CEO Mike Belshe acknowledged Sun’s involvement in the joint venture, stressing the company’s continued commitment to security.

Sun maintained that his involvement in wBTC is entirely strategic. He also acknowledged that he does not control the private keys to the wBTC reserves and cannot move any BTC reserves.

Coinbase later delisted the synthetic BTC product on Ethereum on December 19, 2024. The crypto exchange argued that it regularly monitors the assets on its platform to ensure they meet its listing standards.

Coinbase revealed that it moved its wBTC order books to limit-only mode, meaning that users could place and cancel limit orders of the token on the platform. It also allowed users to move their wBTC tokens off the exchange even after its delisting.

The delisting of wBTC resulted in a legal challenge from BiT Global, a firm backed by Sun. The company later dropped the lawsuit against Coinbase with prejudice, meaning it can’t be brought again.

Since its inception, the substitution and migrational flows from wBTC to cbBTC have driven a large portion of the token’s growth on Ethereum. cbBTC’s growth can also be attributed to Coinbase’s ability to funnel BTC holders directly into cbBTC through its existing custody, prime brokerage, and exchange rails. The initiative has reduced the hops and operational friction compared to third-party exchanges, making cbBTC easily accessible to institutions and treasuries that already clear through Coinbase.

cbBTC’s growth can also be linked to its integration into Persistence DEX V2 on June 25. The initiative enables cross-chain swaps between Base and BNB Chain via an unaudited mainnet in closed beta.

Cross-chain swaps of cbBTC require users to have a minimum of $10 in cbBTC and roughly $0.005 ETH for gas fees to participate. The initiative for Coinbase’s Wrapped Bitcoin expands its use case beyond the exchange’s ecosystem into decentralized cross-chain liquidity. cbBTC’s unaudited status and gated access also limit its immediate adoption, but increased demand could follow if Persistence scales its BTCFi sector. 

cbBTC-backed loans surpass $1B in collateral

Coinbase also revealed on July 15 that its cbBTC-backed loans surpassed $1 billion in collateral, facilitated by Morpho Labs on Base. The token has become the exchange’s collateral option due to its role in Coinbase’s on-chain ecosystem.

The increase in cbBTC collateral suggests a surge in its utility, signaling institutional and retail demand for holding Coinbase’s wrapped BTC variant. The token’s reliance on centralized custody, through Coinbase, limits its growth among decentralized exchanges.

Coinbase also plans to introduce proof of reserves for cbBTC’s BTC collateral. The platform announced the initiative during the token’s initial launch, which would verify the 1:1 backing of cbBTC with Bitcoin held in the exchange’s custody. The commitment to deliver proof of reserves for the wrapped BTC could boost trust among DeFi users and institutions and potentially increase its adoption.

Coinbase also plans to expand cbBTC’s cross-chain Bitcoin utility beyond Ethereum and Base to chains like Solana. Its whitepaper reveals that the firm wants to integrate into Solana to leverage its high-speed infrastructure for low-cost swaps and lending use cases.

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