Coinbase Brings Bitcoin to Solana, Spurring High Hopes for DeFi Surge

Nearly
two
years
ago,
FTX’s
collapse
blew
a
bitcoin-sized
hole
in
Solana-based
decentralized
finance
that
hadn’t
truly
been
filled
—
possibly
until
now.

Bitcoin

(BTC)
remains
a
benchmark
asset
for
trading,
lending
and
borrowing
on
centralized
crypto
exchanges.
It
takes
extra
effort
to
bring
that
crucial
financial
functionality
to
DeFi
on
other
blockchains.
Basically,
someone
must
issue
a
token
backed
by
and
pegged
to
bitcoin
on
the
chain.

Exchange
giant
Coinbase
is
trying
to
fill
that
role
on
Solana

(SOL)
with
cbBTC.
Launched
Thursday,
it
lets
traders
swap
in
and
out
of
the
bitcoin-backed
token
by
sending
it
between
the
exchange
and
their
Solana
wallets.
That
ease
of
entry
and
exit
has
contributors
at
many
Solana-based
protocols
hopeful
cbBTC
can
become
a
gold
standard
that
ripples
across
the
entire
ecosystem.

One
high-ranking
official
in
Solanaland
said
there’s
“much
higher
hopes”
Coinbase’s
cbBTC
will
be
a
hit
—
especially
at
a
time
when
bitcoin,
the
world’s
biggest
cryptocurrency,
is
ripping
to
new
all-time
highs
in
the
wake
of
Donald
Trump’s
election.

Solana
DeFi
hasn’t
enjoyed
a
comparably
straightforward
bitcoin
stand-in
since
the
mysterious
demise
of
the
last
standard-bearer,
soBTC.
That
wrapped
bitcoin
token
is

widely
believed
to
have
been
controlled
by
FTX.
It
died
with
the
fraudulent
exchange
in
November
2022.

SoBTC’s
failure
left
the
chain’s
entire
DeFi
ecosystem
without
a
widely
recognized
standard
for
trading
bitcoin
on
Solana.
This
put
it
at
a
disadvantage
to
Ethereum
DeFi,
which
has
long
had
its

own
solution
(including
a

new
one
from
Coinbase
itself)
that
Solana
protocols
accessed
via
bridging.

Coinbase’s
native
issuance
of
cbBTC
on
Solana
“reduces
the
risk
surface
by
half,”
said
InfraRay,
a
contributor
to
popular
Solana-based
decentralized
exchange
Raydium.

“We
could
see
a
surge
of
BTC
liquidity
on-chain,
which
could
increase
usage”
in
many
different
DeFi
protocols,
Tom
said.
“It’s
early,
but
the
hope
is
that
robust
liquidity
for
cbBTC
could
get
some
of
those
flywheels
going.”

That’s
only
if
Coinbase
succeeds
in
turning
cbBTC
into
Solana’s
standard
stand-in
for
bitcoin.
Other
companies
have
failed
at
that
effort.

21.co
has
less
than

$1.5
million
worth
of
its
21BTC
circulating
in
Solana
DeFi.
Threshold’s
tBTC

hasn’t
done
much
better.

By
comparison,
Coinbase
has
nearly
$10
million
worth
of
cbBTC
ready
to
deploy
into
Solana
DeFi,
according
to

blockchain
data.
An
additional
$500,000
of
cbBTC
is
already
sloshing
around
trading
pools
on
Meteora
and
Orca
and
in
a
reserve
on
trading
protocol
Kamino.

“I
think
and
hope
it’s
gonna
be
big,”
said
Kamino
co-founder
Marius
Ciubotariu.
“There’s
no
reason
for
most
BTC
DeFi
stuff
to
happen
on
Ethereum.”

Coinbase
hasn’t
historically
participated
in
Solana
DeFi.
CbBTC
is
its
first
token
issued
natively
on
the
Solana
blockchain.
The
exchange
is
much
more
involved
in
the
Ethereum
world,
particularly
via
its
own
layer-2
network,
Base.

“Unlocking
BTC
utility
for
our
customers
across
the
on-chain
economy
is
at
the
heart
of
our
decision
to
launch
cbBTC.
Expanding
support
to
Solana
and
potentially
other
chains
gives
our
customers
more
options
and
aligns
with
our
overall
strategy
of
bringing
billions
of
users
on-chain,”
a
company
spokesperson
said.

In
September,
Coinbase
first
rolled
out
cbBTC
on
Base
and
Ethereum
with
the
promise
of
supporting
more
chains
later.
But
cbBTC
traders
moving
bitcoin
to
Base
get
a
small
leg
up
on
those
moving
bitcoin
to
Solana.
Coinbase-to-Base
bitcoin
transfers
are
free;
Coinbase-to-Solana
bitcoin
transfers
cost
40
cents.