Hey Edge readers,
Welcome back to another action-packed edition! This week, we’re diving into the launch of Coinbase’s cbBTC and exploring how you can make the most of it to earn yield. We’ll also highlight the top DeFi yield opportunities catching our eye and keep you updated on the latest DeFi news.
In today’s edition:
- Coinbase’s cbBTC is now onchain 🟠
Learn how cbBTC works and where to earn yield.
- Top DeFi yields 🌟
The top yield opportunities we’re watching this week.
- Saylor continues stacking BTC 🗞️
Trump’s World Liberty on 9/16, STRK staking, and more.
Stay sharp. 🫡
-The Exponential team
Coinbase’s cbBTC is now onchain
Coinbase has just rolled out cbBTC, and it has already surpassed a $100 million market cap within a day!
What is cbBTC?
cbBTC (Coinbase Wrapped BTC) is a DeFi-friendly version of BTC issued by Coinbase. It is a tokenized representation of BTC on the Ethereum and Base networks, backed 1:1 by native BTC held securely in Coinbase’s custody. This means for every cbBTC in circulation, there’s an equivalent amount of BTC stored by Coinbase.
One of the key advantages of cbBTC is that Coinbase customers can unwrap cbBTC and redeem the underlying BTC simply by depositing cbBTC into their Coinbase accounts. This seamless conversion removes friction, allowing customers to put their idle BTC to work in new ways onchain.
cbBTC enables millions of Coinbase users to tap into novel DeFi use cases, such as:
- Earning yield: Participate in yield-generating opportunities like staking, lending, and yield farming.
- Collateralizing assets: Use cbBTC as collateral to borrow other crypto assets, leveraging your holdings without selling your BTC.
By bridging BTC to the DeFi ecosystem, cbBTC opens up a world of possibilities for BTC holders.
How does cbBTC work?
cbBTC operates through a transparent minting and burning process to ensure its total supply always matches the amount of BTC held in reserve by Coinbase.
- Minting: When a user initiates a withdrawal of BTC from their Coinbase account to the Ethereum or Base networks, an equivalent amount of cbBTC is minted and sent to the user’s specified wallet address. This effectively “wraps” the BTC into cbBTC, making it compatible with DeFi applications
- Burning: When cbBTC is deposited back into a user’s Coinbase account, the cbBTC is burned, and the equivalent amount of BTC is released from Coinbase’s reserves into the user’s account. This process “unwraps” the cbBTC back into native BTC.
The smart contracts involved in minting and burning cbBTC utilize the same core codebase as cbETH (Coinbase Wrapped Staked ETH) smart contract, which has been audited by OpenZeppelin. These contracts are designed to mint and burn cbBTC as needed, ensuring the total supply of cbBTC always matches the amount of BTC held as backing.
It’s important to note that Coinbase maintains ultimate control over the cbBTC contracts, including the ability to upgrade contracts, freeze, and blacklist addresses. However, these roles are protected by Coinbase’s robust key management systems and require approval from multiple departments, including security, engineering, and finance.
How to earn yield with cbBTC?
Currently, cbBTC is supported on Base and Ethereum and has already integrated with several prominent DeFi protocols, with more on the way. Here are some early opportunities to earn yield with cbBTC:
Aerodrome
- cbBTC-WETH 0.05% on Base - 348% APY
- cbBTC-USDC 0.05% on Base - 743% APY
Curve
- cbBTC-WBTC on Ethereum - 2.4% APY
Moonwell
- cbBTC on Base - 0.4% APY
Uniswap
- cbBTC-WETH 0.05% on Base - 4.4% APY
- cbBTC-WETH 0.3% on Base - 29% APY
- cbBTC-WETH 0.3% on Ethereum - 0.2% APY
- cbBTC-WBTC 0.05% on Ethereum - 0.9% APY
- cbBTC-USDC 0.3% on Ethereum - 1.3% APY
Top DeFi yields
Some changes to the top pools this week. Pendle is adding more options for BTC yield including EtherFi’s eBTC and Lombard’s LBTC. ETH pools saw a major shift with Jones rising to the top with their newly launched ETH vaults.
Top BTC pools 🟠
1. Bella WBTC on Ethereum - 12% APY
2. Solv (GMX) WBTC on Arbitrum - 10% APY
3. Pendle LBTC (Corn) on Ethereum - 10% APY
4. Pendle eBTC on Ethereum - 9% APY
5. Ribbon WBTC on Ethereum - 9% APY
Top ETH pools 🔷
1. PancakeSwap rETH-WETH on Ethereum - 40% APY
2. Jones ezETH-ETH on Arbitrum - 35% APY
3. Uniswap swETH-WETH on Ethereum - 28% APY
4. Jones wstETH-WETH on Arbitrum - 27% APY
5. Jones weETH-WETH on Arbitrum - 27% APY
Top USD pools 💵
1. Tokan USDC-CHI on Scroll - 68% APY
2. Uniswap sUSDe-USDT on Ethereum - 50% APY
3. Curve cyDAI-cyUSDC-cyUSDT on Ethereum - 33% APY
4. Beefy shezUSD-USDC on Ethereum - 33% APY
5. Velodrome HAI-LUSD on Optimism - 29% APY
In the news
- Saylor’s MicroStrategy purchases an additional $1.1 billion of BTC - Read
- Trump’s World Liberty to be released on September 16th - Read
- Sky (formerly Maker) proposes to fully offload WBTC over Justin Sun concerns - Read
- Layer 2 network Starknet passes vote to implement staking for STRK holders - Read
- Aave launches dedicated lending market for EtherFi - Read