Coinbase will release four new wrapped tokens: cbLTC (Litecoin), cbADA (Cardano), cbDOGE (Dogecoin), and cbXRP (XRP), after cbBTC was launched. These tokens will extend the liquidity and utility of their respective native cryptos to the Base network, which will promote decentralized finance (DeFi) applications and user experience.
Increasing DeFi Access with Wrapped Tokens
Wrapped tokens are cryptocurrencies pegged to the value of their underlying assets, making them usable across various blockchain environments. Through the introduction of cbLTC, cbADA, cbDOGE, and cbXRP, Coinbase allows users to utilize these assets on the Base network, making it easy to integrate with various DeFi protocols.
These tokens will be collateralized 1:1 by their native cryptocurrencies, with Coinbase holding them in secure custody. Assets can be converted to the wrapped form when sent to Base, and reversed when sent back to their native networks. This process preserves value parity and allows users to engage in DeFi activity without ever having to leave the Coinbase ecosystem.
Strategic Implications for the Crypto Ecosystem
The release of these wrapped tokens represents Coinbase’s support for the growth of the use cases of significant cryptocurrencies in the DeFi ecosystem. Through enabling access to assets such as Litecoin, Cardano, Dogecoin, and XRP on the Base network, Coinbase promotes the interoperability and usability of the above tokens and can invite a larger community to DeFi platforms.
Additionally, the move makes Coinbase a central player in the wrapped token market, providing alternatives to what is currently available in the form of Wrapped Bitcoin (WBTC). With its reputation and infrastructure, Coinbase seeks to offer secure and efficient wrapped tokens, mitigating centralization and trust concerns inherent in the current market.
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