Bitcoin was never meant to be just a store of value.
While its scarcity and predictable monetary policy have cemented its role as digital gold, a growing ecosystem of tokenized derivatives is proving that BTC can do more than sit in cold storage. With over 172,000 BTC now wrapped and active across multiple blockchains, solutions like Wrapped Bitcoin (WBTC) and Coinbase’s cbBTC are unlocking new dimensions of utility—enabling Bitcoin to participate in DeFi, cross-chain trading, and yield-generating strategies.
This article explores how these two leading tokenized Bitcoin variants are reshaping BTC’s functionality beyond its native chain.
The Rise of Tokenized Bitcoin
The demand for programmable, interoperable Bitcoin has fueled the rise of tokenized Bitcoin products, designed to bring BTC’s value onto smart contract platforms. Among these, wrapped Bitcoin stands out as the most widely adopted category.
Wrapped Bitcoin refers to tokens representing native BTC on other blockchains—typically backed 1:1 by custodied reserves and minted or burned through a deposit-and-redeem mechanism. These tokens inherit Bitcoin’s value while gaining new capabilities: programmability, lower transaction costs, and access to decentralized finance (DeFi) applications.
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Today’s landscape features several wrapped BTC variants, each with distinct trust models:
- WBTC: Governed by a DAO with multi-signature custody, originally launched in 2019 and now managed by Bit Global.
- cbBTC: Fully custodied by Coinbase, launched natively on Base, Ethereum, and Solana.
- tBTC: A decentralized, smart-contract-based solution from Threshold Network.
- LBTC: A liquid staking derivative from Lombard, securing PoS chains via Babylon Protocol.
Despite differing architectures, all models require users to entrust their BTC to third parties in exchange for a synthetic version usable across ecosystems.
Since January 2023, the total market value of wrapped Bitcoin has grown fivefold, driven by rising BTC prices and new cross-chain offerings. WBTC and cbBTC now dominate the space with a combined supply of 172,000 BTC, representing the vast majority of tokenized Bitcoin in circulation.
WBTC vs. cbBTC: Market Share and Distribution
WBTC has long been the leader in the wrapped Bitcoin space. As the first major implementation, it built deep liquidity and integration across Ethereum-based protocols. However, its dominance is being challenged.
In September 2024, WBTC’s governance transitioned to Bit Global—a shift that coincided with slowing growth. Meanwhile, cbBTC, launched by Coinbase in 2024, has seen rapid adoption across Base, Solana, and Ethereum.
As of June 1, 2025:
- WBTC supply: ~128,800 BTC (81% of total wrapped BTC)
cbBTC supply: ~43,000 BTC (19% share), distributed as:
- 27,600 BTC on Ethereum
- 13,200 BTC on Base
- 23,000 BTC on Solana
Though WBTC still leads in total volume, cbBTC is gaining momentum—particularly on high-performance chains like Base and Solana.
Cross-Chain Activity: Where Wrapped Bitcoin Is Used
The true test of utility lies in usage. By analyzing on-chain metrics such as active addresses, transaction volume, and velocity, we can see how WBTC and cbBTC are being used across different networks.
Active Addresses and Engagement
User engagement varies significantly by chain:
- Base (cbBTC): Leads with ~7,000 average daily active addresses—fueled by Coinbase’s massive user base and low fees.
- Solana (cbBTC): Shows strong growth since April 2025, benefiting from fast finality and minimal costs.
- Ethereum (WBTC/cbBTC): Despite holding large amounts of wrapped BTC, activity is less frequent—indicating larger but less regular transactions.
Transaction Volume and Velocity
Transaction data further highlights usage disparities:
Base cbBTC: Averages ~$40 billion in weekly adjusted transfer volume—far exceeding Ethereum’s WBTC (~$1 billion).
- Note: Two spikes (April 22 and 26) reached over $500B and $787B due to repetitive trades from the "Impermax Exploiter" address interacting with Morpho—a non-organic anomaly excluded from analysis.
- Circulation velocity—how often tokens change hands relative to supply—is highest for Base cbBTC, followed by Solana cbBTC and Ethereum variants.
All wrapped forms of Bitcoin show higher velocity than native BTC, underscoring their role in active financial ecosystems rather than passive holding.
Wrapped Bitcoin in DeFi: Lending, Trading, and Liquidity
The primary driver behind wrapped Bitcoin demand is DeFi access. By bridging BTC into programmable environments, users can leverage their holdings without selling—unlocking yield, liquidity provision, and borrowing opportunities.
Decentralized Exchanges (DEXs)
On Ethereum:
- WBTC dominates DEX volume, especially on Uniswap v3.
- cbBTC trades exist but remain marginal compared to WBTC.
On Layer 2s:
- cbBTC leads on Base, where it is natively issued.
- Most trading occurs on Aerodrome, with volumes peaking above $2.5 billion in early 2025.
- Uniswap v3 on Base also sees significant cbBTC activity—though volumes were adjusted for repeated transactions from a single exploiter address in late April.
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Lending Markets
Wrapped BTC plays a critical role in lending protocols:
Over $7 billion in WBTC and cbBTC is locked across Aave v3, Morpho, and Spark.
- ~$5 billion in WBTC
- ~$2 billion in cbBTC
- These assets serve as collateral for loans, enabling leveraged positions and capital efficiency.
Protocols like Morpho have integrated both WBTC and cbBTC directly—highlighting growing institutional confidence in tokenized Bitcoin as reliable collateral.
Risks and Trade-offs
While wrapped Bitcoin expands utility, it introduces new risks:
- Centralization: Both WBTC (multi-sig DAO) and cbBTC (Coinbase custody) rely on centralized entities for minting and redemption.
- Trust assumptions: Users must trust custodians not to freeze assets or mismanage reserves.
- Smart contract risk: Bridging and wrapping involve complex code vulnerable to exploits.
Despite these concerns, adoption continues to grow—suggesting users view the benefits (liquidity, yield, interoperability) as outweighing the risks.
The Future of Bitcoin Utility
Bitcoin’s role as a store of value remains unchallenged. But innovations like WBTC and cbBTC prove it can also be a productive asset.
By enabling BTC to move across chains, earn yield, and power DeFi applications, tokenized Bitcoin bridges the gap between monetary reserve and programmable capital. As rollups, sidechains, and interoperability protocols evolve, wrapped BTC will likely remain a cornerstone of cross-chain finance.
In a world where capital efficiency matters, making Bitcoin do more isn’t just innovative—it’s essential.
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Frequently Asked Questions (FAQ)
Q: What is wrapped Bitcoin?
A: Wrapped Bitcoin (like WBTC or cbBTC) is a tokenized version of BTC issued on other blockchains, backed 1:1 by real Bitcoin. It allows BTC to be used in DeFi, DEXs, and lending platforms outside its native network.
Q: Is cbBTC safer than WBTC?
A: Neither is inherently "safer"—they have different trust models. cbBTC relies on Coinbase’s custodianship (centralized but regulated), while WBTC uses a multi-signature DAO (more decentralized but complex). Your choice depends on risk tolerance.
Q: Can I redeem wrapped BTC for real Bitcoin?
A: Yes. Both WBTC and cbBTC allow redemption through their issuing platforms—though processes may require KYC or take time depending on the provider.
Q: Why is Base seeing so much cbBTC activity?
A: Base benefits from Coinbase’s massive user base, low fees, seamless wallet integration (Coinbase Wallet), and focus on consumer-friendly DeFi apps—making it ideal for mainstream adoption.
Q: Does using wrapped Bitcoin dilute Bitcoin’s value?
A: No. Wrapped BTC doesn’t increase supply—it only represents existing BTC in a more usable form. In fact, high demand for wrapping may reflect stronger confidence in Bitcoin’s underlying value.
Q: Are there decentralized alternatives to WBTC and cbBTC?
A: Yes. Projects like tBTC (by Threshold) and Stacks-based solutions aim to offer trustless BTC wrapping using smart contracts or federated pegs—though they currently have lower adoption.