A tokenized version of bitcoin {{BTC}} offered by Coinbase (COIN) has gone live on the Ethereum and Base networks. The crypto exchange is entering a market whose biggest player is backed by over $8 billion worth of the asset.

The Coinbase Wrapped BTC (cbBTC) is an ERC-20 token backed on a 1:1 basis with bitcoin (BTC) held by Coinbase. Such wrapped tokens allow users to utilize bitcoin they already hold in new ways onchain, such as providing their bitcoin as liquidity to decentralized finance DeFi protocols, or using it as collateral to borrow other crypto assets.

Several DeFi services are expected to offer support for cbBTC from Thursday, Coinbase said, including exchanges Aerodrome and Curve, lending applications Aave, Sky Protocol, Compound, real-world assets provider Maple and cross-chain bridges such as deBridge, among others.

Bitcoin sent by Coinbase users from the exchange to specific addresses on Base or Ethereum will automatically be converted 1:1 to cbBTC. When users receive cbBTC in their Coinbase accounts, it will be converted 1:1 from cbBTC to BTC.

At launch, cbBTC will be available to Coinbase users in the U.S. (excluding New York State), U.K., EEA states, Singapore, Australia, and Brazil.

Justin Sun on cbBTC

The token comes weeks after Coinbase first teased an announcement amid controversy around BitGo’s wrapped bitcoin (WBTC) token - which leads the wrapped bitcoin category and is worth over $8 billion as of Thursday.

At the time, Jesse Pollak, who created Base, said the team planned to build a "massive bitcoin economy" on the network.

Tron founder Justin Sun, who partially controls an entity named BiT Global that now handles the custody for WBTC, used Thursday's announcement to post what he describes as drawbacks of the new Coinbase offering.

"#cbbtc lacks Proof of Reserve, no audits, and can freeze anyone's balance anytime," Sun wrote. "Essentially, it’s just 'trust me.'"

UPDATE (15:06 UTC): Adds details from post about cbBTC by Justin Sun on X.