Written by Tanay Ved

Compiled by: Luffy, Foresight News

Key Takeaways:

• Wrapped Bitcoin, such as WBTC and cbBTC, extends Bitcoin’s utility beyond its own network, enhancing cross-chain accessibility and interoperability.
• Wrapped Bitcoin has different custody models and governance structures, ranging from fully centralized issuers (such as Coinbase’s cbBTC) to decentralized, smart contract-based systems (such as Threshold tBTC).
• WBTC has the largest supply (about 129,000 BTC), but cbBTC’s share is rising rapidly, with issuance on Base and Solana totaling about 43,000 BTC. Together, they represent more than 172,000 wrapped bitcoins, which are used differently on different blockchains.
• Wrapped Bitcoin is widely adopted in the DeFi space. WBTC dominates Ethereum DEXs (led by Uniswap v3), while cbBTC is more active on DEXs such as Aerodrome. A total of more than $7 billion in WBTC and cbBTC are locked in lending protocols such as Aave and Morpho, where users use them as collateral for lending.

introduce

Bitcoin’s scarcity and predictable monetary policy make it an ideal “store of value,” and its ownership is increasingly shifting to long-term holders, ETFs, and public companies. But as BTC is “hoarded” in large quantities, the utility of its $2 trillion native token is not being developed. What does it mean?

In response, a growing number of products have emerged with the common goal of making Bitcoin productive. From Bitcoin-based lending (such as Coinbase’s partnership with Morpho, or Cantor Fitzgerald’s Bitcoin credit facility through Maple Finance), to L2s designed to scale Bitcoin’s functionality, Wrapped Bitcoin for cross-chain interoperability, and enterprise finance tools like Strategy, all of these are designed to make Bitcoin more productive.

In this article, we explore the growing ecosystem of tokenized Bitcoin, focusing on Wrapped Bitcoin (WBTC) and Coinbase’s cbBTC, and analyzing how they can extend the utility of BTC across chains.

The Current State of Tokenized Bitcoin Products

The demand for using Bitcoin on smart contract platforms eventually gave rise to a range of tokenized Bitcoins, also known as “Bitcoin derivatives.” Among them, wrapped Bitcoin is the largest category, representing a tokenized version of BTC issued on other blockchains, usually issued through a minting and destruction mechanism and backed by custodial native Bitcoin at a 1:1 ratio.

Wrapped Bitcoin tokens are designed to improve the accessibility and interoperability of BTC, bringing programmability and low-cost execution capabilities that native Bitcoin does not have. The following table outlines the main wrapped Bitcoins and compares their custody models, issuing entities, governance structures, and supported blockchain networks:

While these tokens all aim to extend Bitcoin’s utility, their trust assumptions vary. Today’s solutions range from fully custodial models like Coinbase’s cbBTC, to DAO-based multi-signature systems like WBTC, to distributed smart contract-based systems like Threshold’s tBTC. In all of these models, users give custody of their Bitcoin to a third party in exchange for a tokenized token.

In addition to the above-mentioned major wrapped Bitcoins, liquid pledged Bitcoin derivatives are also on the rise. For example, Lombard's LBTC provides security for the Proof of Stake (PoS) chain through the Babylon Protocol, enabling BTC holders to earn staking returns.

WBTC and cbBTC

Since January 2023, the market value of wrapped Bitcoin has increased fivefold, driven by rising BTC prices and the issuance of new products across chains. The two tokens with the largest market capitalization are WBTC and cbBTC, issued by BiT Global and Coinbase, respectively, with a total supply of 172,000.

As the first wrapped Bitcoin listed in 2019, WBTC has always dominated the market. However, as the ownership of WBTC was transferred to BiT Global in September 2024, the market demand for WBTC seems to have weakened. At the same time, Coinbase's cbBTC was launched on Base, Ethereum, and Solana and grew rapidly, making up for the decline of WBTC.

As of June 1, 2025, WBTC accounts for 81% of the wrapped Bitcoin market, with a current supply of 128,800 BTC. In contrast, cbBTC accounts for the remaining 19%, with Ethereum, Base, and Solana issuing 27,600, 13,200, and 23,000 BTC, respectively.

Bitcoin cross-chain usage

As Bitcoin proliferates on blockchains like Ethereum, Base, and Solana, on-chain activity can provide deeper insights into its functional role in these ecosystems. Active addresses can give us a sense of the breadth of user interaction with cross-chain tokenized Bitcoin.

cbBTC on Base leads the way with an average of around 7,000 daily active addresses, thanks to Coinbase’s wide distribution and lower transaction costs. Solana follows closely behind, with active addresses continuing to grow since April, also thanks to its cheap, high-throughput infrastructure. Ethereum participation appears to be limited to larger but less frequent transactions, suggesting that while a large portion of cbBTC and WBTC are on Ethereum, they are less actively used than Base and Solana.

Trading activity (measured by the number of transactions and native token transfers) shows a similar picture. The chart below shows the adjusted transfer volume of WBTC and cbBTC on each chain. cbBTC on Base performed particularly well, with an average weekly transfer volume of about $40 billion. This is much higher than WBTC on Ethereum, which has a transfer volume of about $1 billion.

Note: cbBTC adjusted transfer volume spiked to $506 billion and $787 billion on April 22 and April 26, respectively. These outliers were excluded because the “Impermax Exploiter” address made duplicate transactions with Morpho on Base, generating non-organic activity.

This trend is further validated by velocity, which measures how often tokenized Bitcoin changes hands relative to its supply. cbBTC on Base has the highest volume, followed by cbBTC on Solana and Ethereum. All wrapped Bitcoin variants show higher velocity than native Bitcoin, highlighting their role in driving Bitcoin activity in on-chain applications.

Wrapped Bitcoin in DeFi

The main driver of the demand for wrapped Bitcoin is that it can unlock on-chain financial services that are not possible with Bitcoin. As an important part of DeFi, WBTC and cbBTC allow users to trade, borrow, and provide liquidity without having to sell their Bitcoin holdings.

On Ethereum, WBTC remains the dominant wrapped Bitcoin in the DEX market, with Uniswap v3 accounting for the majority of its trading volume. While cbBTC is also traded on Ethereum DEX, its scale is relatively small. To access applications on Ethereum scaling solutions, WBTC is usually bridged to L2, while cbBTC is natively issued on Base and Solana, enabling it to be used more widely across chains.

In contrast, cbBTC plays a more prominent role in the L2 ecosystem, especially on Base, where it is the leading tokenized Bitcoin in DEX activity. Most of the volume occurs on Aerodrome, which peaked at over $2.5 billion in early 2025, followed by Uniswap v3 on the Base chain.

Note: Uniswap v3 Base volumes on April 26 and April 30 have been adjusted to exclude a series of duplicate cbBTC transactions initiated by a single address.

In addition to trading, Wrapped BTC is also an important part of the Ethereum lending market. Both WBTC and cbBTC are widely used as collateral assets, with Aave v3, Morpho, and Spark being the largest holders of cbBTC. As of June 2025, more than $7 billion of WBTC ($5 billion) and cbBTC ($2 billion) are locked in these protocols, reflecting the growing integration and demand for Bitcoin lending.

However, there are also many drawbacks to introducing different versions of wrapped Bitcoin as collateral. Custodial models like cbBTC and WBTC may have centralization risks. Users must weigh these risks against the liquidity and utility that wrapped Bitcoin brings.

in conclusion

While Bitcoin remains entrenched as a store of value, tokens like WBTC and cbBTC are expanding Bitcoin’s utility. With these products, Bitcoin can now be seamlessly transferred across chains, participate in on-chain finance, and integrated into new execution environments. While these models introduce different trust assumptions, their adoption demonstrates the market’s demand for increased Bitcoin versatility. As parallel technologies like Rollups and sidechains develop, tokenized Bitcoin will likely remain a critical bridge between Bitcoin’s reserve currency status and programmable economies built on other networks.