Key Points
- Coinbase promotes cbBTC, a wrapped Bitcoin alternative for Base.
- New posts on X suggest cbBTC could run on the L2 blockchain.
Coinbase might be developing an alternative to BitGo’s wrapped Bitcoin (WBTC) to run its own L2 blockchain, Base. This would provide users access to Bitcoin.
Speculations arrived after the exchange shared posts via X, saying that cbBTC is coming soon.
Coming soon.
— Coinbase 🛡️ (@coinbase) August 14, 2024
Coinbase‘s posts were followed by a post from Jesse Pollak who is running Base, in which he explained that the team is planning to build a massive Bitcoin economy on the network.
In a post on X today, Pollak said that he loves Bitcoin and he’s grateful for its role in kickstarting crypto.
A wrapped token means that it becomes available on other protocols apart from the one that it was originally created for. This brings increased liquidity to the target ecosystem.
For instance, a wrapped Bitcoin represents one of the originals, stored in custody. When traders want to redeem the wrapped coins for Bitcoin, the wrapped version is “burnt” or deleted from the chain and the original one is released.
BitGo’s Controversy Over wBTC
BitGo’s wrapped Bitcoin (wBTC) has been surrounded by controversy recently. BitGo recently said that it was establishing a joint venture with BiT Global, a Hong Kong-registered custody platform that’s partially owned by the Tron ecosystem and the founder of Tron, Justin Sun.
The venture will continue to reportedly use the same BitGo multi signature technology and deep cold storage.
This announcement triggered a neutral response as there’s no technical change to the product and all data regarding the underlying reserves is still verifiable on-chain.
There’s been also a negative reaction following the announcement coming from the forums of DAI issuer MakerDAO. On the forum, there’s been an executive proposal for MakerDAO token holders to stop wBTC borrowing and cut wBTC debt limits to 0 DAI to reduce risks.
However, Dune on-chain data reveals that there has been no change in the supply of wBTC which translates into the fact that traders are not trying to exit the protocol.
Justin Sun Addresses Community Concerns
Justin Sun also addressed the issue via a post on X saying that he’s aware of the community’s concerns over his involvement in various projects including wBTC.
He clarified the situation, highlighting the following:
- There have been no changes to wBTC compared to before
- The audits are conducted in real time and can be accessed publicly via the wBTC network
- The minting process is entirely managed by the custodians Bitglobal and Bitgo as before
- His personal involvement in wBTC is entirely strategic
- He doesn’t control the private keys to the wBTC reserves and cannot move any BTC reserves
Sun concluded by saying that his only goal is to promote projects dedicated to decentralization, security protocols, and safety. wBTC is a critical part of the ecosystem according to him and he promised to make sure it will continue that way.
