Posts on X from Coinbase and Base creator Jesse Pollack suggest the crypto exchange is developing a wrapped bitcoin similar to Bitgo’s wBTC to run on the layer-2 blockchain.
Despite some controversy over wBTC, BitGo’s protocol remains stable.
Crypto exchange Coinbase (COIN) appears to be developing an alternative to BitGo’s wrapped bitcoin wBTC (WBTC) to run on its own layer-2 blockchain, Base, to provide users a way of accessing the largest cryptocurrency by market value on the network.
Speculation was sparked by cryptic posts from Coinbase late Tuesday U.S. time. The posts contained the wording: “cbBTC” and “Coming soon.”
They were followed by a post from Jesse Pollak, who runs Base, saying how the team plans to build a “massive bitcoin economy” on the network.
Wrapping a crypto token is a way of making it available on protocols other than the one it was originally designed for, bringing increased liquidity to the target ecosystem. Each wrapped bitcoin represents one of the original, which is stored in custody. When a trader wants to redeem the wrapped token for bitcoin, the wrapped version is “burnt,” or deleted from the chain, and the original is released.
Coinbase’s announcement comes as a cloud hangs over wBTC. Earlier the month, BitGo said it was establishing a joint venture with BiT Global, a Hong Kong-registered custody platform partially owned by the Tron ecosystem and Tron founder Justin Sun. The venture, it said, will continue to use the same BitGo multisignature technology and deep cold storage.
The response to the announcement was generally neutral because there is no technical change to the product and all data about underlying reserves continues to be verifiable on-chain. Some chatter on the forums of DAI stablecoin issuer MakerDAO, however, expressed a negative reaction. An executive proposal for MakerDAO token holders proposes to stop wBTC borrowing and cut wBTC debt limits to 0 DAI to reduce risk is open for the next month.
Still, on-chain data from Dune shows there has been no change in supply for wBTC, meaning traders aren’t trying to exit the protocol en-masse.
In a post on X, Sun said that there will be “no changes to WBTC” outside of the joint venture and he does not control the protocol’s private keys and cannot move any of the BTC reserves.
“My personal involvement in WBTC is entirely strategic,” he wrote.
