Circle debuts cirBTC on Ethereum to challenge Coinbase in the wrapped bitcoin market
Key takeaways
- Synthetic, or wrapped, bitcoin tokens exist to address the historical lack of provision for DeFi activities on the Bitcoin network.
- The first token to cross the divide, wrapped bitcoin (wBTC), was introduced in 2019 and remains the largest, with a market cap of around $7.3 billion.
- Circle is pitching cirBTC to institutions that may focus their crypto allocation on BTC and are familiar with the company and trust its infrastructure due to its visibility in the stablecoin market.
Circle Internet's (CRCL) wrapped version of bitcoin BTC$63,271.85, cirBTC, is live on Ethereum as the company best known for its dollar-pegged stablecoin takes on Coinbase (COIN) for dominance of the synthetic BTC market.
The New York-based firm said it developed cirBTC, a token backed 1:1 by the world's largest cryptocurrency, to allow traders to access their bitcoin wealth in decentralized finance (DeFi) protocols, including lending, decentralized exchange (DEXs), tokenized assets and stablecoins.
Synthetic, or wrapped, bitcoin tokens exist to address the historical lack of provision for DeFi activities on the Bitcoin network. Many cryptocurrency users prefer to hold only bitcoin because it is worth more than every other crypto combined. But using it for DeFi is challenging because that Bitcoin lacks the native programmability of networks like Ethereum.