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Coinbase just launched cbBTC, a tokenized Bitcoin asset on the Solana blockchain, to revitalize the DeFi platform. Almost 2 years after the FTX collapse destroyed Solana DeFi, Bitcoin on Solana may finally be back in action with Coinbase’s new integration.
With cbBTC, Bitcoin-backed transactions have a direct entry to Solana DeFi. Traders can bridge their cbBTC between Coinbase accounts and Solana wallets for trading, lending and borrowing across Solana protocols. This ease of access and Coinbase’s influence has got many hoping for more Bitcoin liquidity on the Solana network.
Market Reactions: Will cbBTC Save Solana DeFi?
The crypto community is excited about the role of Coinbase in Solana DeFi. One of the lead community members in the Solana camp said cbBTC by Coinbase will “become a new standard” as Bitcoin on Solana gains traction with the growing demand for cross-chain financial services.
Until now, after FTX’s collapse in 2022, Solana DeFi had no strong driver as soBTC was a wrapped Bitcoin token presumed to be tied to FTX and is no longer operational. With no widely adopted Bitcoin alternative, Solana couldn’t compete with Ethereum, which has multiple Bitcoin integration solutions. As a result of this, many now think Coinbase’s cbBTC can bring life and liquidity back to Solana and start a new chapter for it in DeFi.
First Direct Foray into Coinbase’s Solana Ecosystem
Coinbase has been a big player in Ethereum DeFi with efforts like Base, its layer-2 network but cbBTC is the first native token on Solana from Coinbase. About $10M worth of cbBTC is ready to be deployed. They are counting on it for the next wave of Bitcoin liquidity on the platform. Confirmation came from a Coinbase spokesperson in an email saying it aligns with the broader mission of “bringing billions of users on-chain”.
Solana has a lot of potential but Coinbase hasn’t been able to get much Bitcoin cross-chain activity going. The good news for Ethereum users is that cbBTC is fee-less on Base network. Coinbase to Solana on the other hand has a tiny $0.40 fee. However, Coinbase is trying to make up for it by allowing users access more Bitcoin on Solana- which enables high-value DeFi functions.
Defi Insiders Expect Bitcoin on Solana to go Mainstream
The crypto community is watching closely how cbBTC affects the Solana ecosystem. Tom, a contributor to the Solana-based exchange Raydium, said that solid cbBTC liquidity could be the trigger that sets off the DeFi apps. “It’s early but the hope is for cbBTC liquidity to unlock some of the flywheels within Solana,” he said.
If cbBTC by Coinbase gets big adoption then Solana might take the lead in DeFi because 21BTC, tBTC amongst other solutions haven’t achieved this kind of traction. Additionally, the launch is happening at a time when Bitcoin price surge has got everyone interested in decentralized financial tools that are compatible with Bitcoin on Solana.
Conclusion
While cbBTC is getting traction on Solana, this might be the moment DeFi on Solana finally turns. Well supported and in high demand for cross-chain Bitcoin solutions, Bitcoin on Solana might finally get its renaissance that cements not just Solana’s ecosystem but also the broader crypto adoption into the mainstream across blockchains.
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