Coinbase has launched cbBTC, its version of wrapped Bitcoin, on the Ethereum and Base networks, allowing for greater Bitcoin usage in decentralized finance (DeFi) applications.

This new ERC-20 token is backed 1:1 by Bitcoin held by Coinbase, with a supply limited to the amount of Bitcoin that Coinbase possesses.

The launch of cbBTC comes in response to concerns about the transparency of Wrapped Bitcoin (WBTC), particularly due to Justin Sun's involvement with the token.

MakerDAO has expressed concerns regarding the risks associated with WBTC, particularly in light of the issues surrounding the TUSD stablecoin's transparency.

Aave DAO has proposed onboarding cbBTC to its platform, offering approximately $150,000 in incentives to support its adoption.

Integrating cbBTC is expected to enhance liquidity and user engagement on Aave, leveraging Coinbase's substantial liquidity and borrowing features.

Nansen CEO Alex Alealso has praised cbBTC's rapid adoption, predicting an increase in total assets on the Base network.

Analysts believe that cbBTC's growth could significantly boost DeFi activities on Coinbase's layer-2 network, Base.

Coinbase plans to expand cbBTC to additional blockchain networks in the future, aiming to enhance its reach in the DeFi space.

Concerns have been raised about potential security and regulatory risks associated with cbBTC, especially regarding the implications for Aave users if Coinbase faces scrutiny.

Within its first 24 hours, cbBTC achieved a market capitalization of nearly $100 million, indicating strong initial interest in the product.

As of the article's publication, Bitcoin was trading at $57,688, reflecting a 2% increase over the previous 24 hours, which may influence the performance of cbBTC.