Coinbase Floats cbBTC On Solana To Boost Its DeFi Landscape

Coinbase has integrated Bitcoin into the Solana blockchain to help boost its DeFi ecosystem post-FTX Exchange collapse

When the FTX Derivative Exchange crumbled almost two years ago, the Solana Decentralized Finance (DeFi) ecosystem was badly impacted. FTX was deeply integrated with Solana, providing liquidity and driving much of the trading activity on the network. 

After the collapse, Solana’s DeFi sector sharply declined as liquidity and trust in the ecosystem dwindled. Coinbase is promising to revive Solana-based finance with a fresh BTC solution. 

This strategic move by Coinbase brings renewed optimism and financial functionality to Solana, filling a critical gap that was long overdue.

Coinbase cbBTC, a Native Bitcoin Standard

In November 2022, FTX’s implosion downed one of crypto’s biggest exchanges and took down Solana’s DeFi standard, soBTC. That wrapped bitcoin token, the former foundation of BTC trades on Solana, disappeared overnight. This left Solana’s DeFi at a clear disadvantage compared to Ethereum, which quickly filled its own BTC gaps.

Coinbase recently launched cbBTC, a Solana-native token designed to bring Bitcoin’s liquidity to Solana’s DeFi ecosystem. Unlike previous BTC-backed tokens, cbBTC operates directly on Solana, enabling seamless trading and transfers between Coinbase accounts and Solana wallets.

This setup gives Solana users a Bitcoin experience similar to Ethereum DeFi users have long enjoyed. Solana users can use Bitcoin to participate in a range of decentralized financial activities directly on the blockchain.

The Solana community is buzzing about cbBTC’s potential, as this new token might become the ecosystem’s universal Bitcoin standard. For developers, cbBTC’s native design reduces risks associated with past solutions that relied on wrapped or bridged tokens. 

A contributor from Raydium, one of Solana’s major DeFi platforms, highlighted that cbBTC’s native structure significantly lowers the counterparty risk. It is by as much as half compared to previous BTC options.

This setup could set off a catalyst effect, where the influx of Bitcoin liquidity sparks more DeFi activity across Solana. As BTC flows into Solana, liquidity could cascade, attracting more developers and projects.

Coinbase’s $10M Bet to Revive Bitcoin in Solana’s DeFi

Notably, previous attempts to bring Bitcoin into Solana’s DeFi, like those from 21.co and Threshold, did not gain traction. However, Coinbase’s introduction of cbBTC brings significant resources, nearly $10 million worth, into the ecosystem, far surpassing its predecessors. Impressively, $500,000 in cbBTC is circulating across major trading pools like Meteora, Orca, and Kamino.

This launch is not just about Solana; it is part of Coinbase’s broader strategy to expand Bitcoin’s role in DeFi. After integrating BTC into its Base network and Ethereum, Coinbase is giving Solana its turn. 

With cbBTC setting a high standard for Bitcoin-backed DeFi on Solana, the ecosystem could see a resurgence in DeFi activity. However, whether cbBTC becomes the go-to solution for Solana’s DeFi will depend on its long-term impact.

Disclaimer: The information provided in this article is for informational purposes only. It does not constitute investment, financial, trading, or any other sort of advice. You should not treat any of BGECrypto’s content as such. BGEcrypto does not recommend that any cryptocurrency should be bought, sold, or held by you. Do your due diligence and consult your financial advisor before making any investment decisions.