.png-a616dc52961c1edd72b0c1fdf5f47e7a.png-8359976fdb0656215e306b0de9208da8.png?class=ppsmall)
.png-a616dc52961c1edd72b0c1fdf5f47e7a.png-d44bdfd9b52d9f76131f38376a1fe385.png?class=sponsorIcon)
Subscribe to Bankless or sign in
Last month, 
Coinbase made waves by launching Coinbase Wrapped Bitcoin (cbBTC). In short, cbBTC functions by converting 
Bitcoin into an ERC-20 token compatible with 
Ethereum and 
Base networks.
When Coinbase users send BTC to an Ethereum or Base address, it’s automatically wrapped into cbBTC at a 1:1 ratio. Conversely, receiving cbBTC in a Coinbase account unwraps it back into BTC, also at a 1:1 rate. The big idea? This approach lets people readily engage with DeFi apps in the Ethereum ecosystem using their Bitcoin holdings without selling them.
So let’s say you’re looking for some affordable opportunities with your newfound cbBTC—where should you begin?
- For starters, in DeFi the most active cbBTC trading avenue is the WETH/cbBTC trading pair on Base via the
Aerodrome decentralized exchange. Liquidity providers who deposit to this pool and stake their LP tokens can earn $AERO emissions for their service, and then you can vote with your $AERO to steer future emissions to earn even more from trading fees.
- But what if you’re interested in leveraging up the size of your Bitcoin position without spending additional capital? If so, the cbBTC Base pool on DeFi lending giant Aave is a great option to consider. Deposit cbBTC to borrow more cbBTC, just be sure to watch and manage your health factor to avoid liquidation of your position.
- If yield farming is more your style, then you could check out Veda’s cbBTC Vault, made in partnership with Instadapp. This vault lets you easily deposit cbBTC to access a basket of automated yield strategies across top DeFi apps like Aave, Uniswap, and Morpho. Smart onchain passive income is another way to think about it. Note, too, that the vault is currently offering 4% APY and 3x Veda points.
Aerodrome, Aave, and Veda are solid options I recommend if you’re just getting started with cbBTC, but they’re also just the tip of a rapidly growing iceberg. DeFi opportunities are blooming here.
For example, you if you want to borrow without levering up, you can borrow the USDC or USDT stablecoins against cbBTC on Fluid, or borrow Sky Protocol’s new USDS stablecoin against cbBTC on Spark. Decentralized debt marketplace Maple has added cbBTC support, Mellow is soon to field its own cbBTC vaults, so on and so forth.
As more of these integrations come online, look for the cbBTC market cap to swell beyond its current $120 million position and for this new wrapped version of Bitcoin to become more central to the Base ecosystem in particular. This is just the beginning!
.png-a616dc52961c1edd72b0c1fdf5f47e7a.png-8359976fdb0656215e306b0de9208da8.png?class=sponsorIcon)
