Coinbase Brings Bitcoin to Solana, Spurring High Hopes for DeFi Surge

FTX's collapse blew a bitcoin-sized hole in Solana DeFi. Can Coinbase's cbBTC finally fill it?

Coinbase is bringing its cbBTC to Solana, sparking hopes for a DeFi surge.

FTX's collapse left a void in Solana DeFi that no bitcoin stand-in has truly filled. Now, Coinbase is stepping up with cbBTC, a token that will allow traders to move bitcoin in and out of Solana DeFi.

Coinbase is bringing its bitcoin-like token to Solana, a move that has many in the decentralized finance (DeFi) community hoping for a boost in activity.

Fresh off the heels of Donald Trump's election and with bitcoin ripping to new all-time highs, one high-ranking official in Solanaland told CoinDesk there's "much higher hopes" for Coinbase's cbBTC.

Solana DeFi hasn't had a good bitcoin stand-in since the last one, soBTC, mysteriously failed. That token, which was believed to be controlled by FTX, died with the fraudulent exchange in November 2022.

With soBTC's failure, the chain was left without a widely recognized standard for trading bitcoin on Solana DeFi. This put Solana at a disadvantage to Ethereum DeFi, which has had its own solution (including a new one from Coinbase itself) that Solana protocols accessed via bridging.

"Coinbase issuing cbBTC natively on Solana reduces the risk surface by half," InfraRay, a contributor to popular Solana-based decentralized exchange Raydium, told CoinDesk.

"We could see a surge of BTC liquidity on-chain, which could increase usage" in many different DeFi protocols, Tom said. "It’s early, but the hope is that robust liquidity for cbBTC could get some of those flywheels going."

But that is only if Coinbase can succeed in making cbBTC Solana's standard stand-in for bitcoin. Other companies have tried and failed at that effort.

21.co has less than $1.5 million worth of its 21BTC circulating in Solana DeFi. Threshold's tBTC hasn't done much better.

Coinbase, by comparison, has nearly $10 million worth of cbBTC ready to deploy into Solana DeFi, blockchain data shows. An additional $500,000 of cbBTC is already sloshing around trading pools on Meteora and Orca and in a reserve on trading protocol Kamino.

"I think and hope it’s gonna be big," Kamino co-founder Marius Ciubotariu told CoinDesk. "There’s no reason for most BTC DeFi stuff to happen on Ethereum."

Coinbase is not known for participating in Solana DeFi. CbBTC is the exchange's first token issued natively on the Solana blockchain. The exchange is much more deeply involved in the world of Ethereum, especially via its own layer-2 network, Base.

"Our decision to launch cbBTC was driven by the goal of unlocking BTC utility for our customers across the on-chain economy. Expanding support to Solana and potentially other chains gives our customers more options and aligns with our overall strategy of bringing billions of users on-chain," a company spokesperson told CoinDesk.

In September, Coinbase first rolled out cbBTC on Base and Ethereum with the promise of supporting more chains later. But cbBTC traders moving bitcoin to Base get a small leg up on those moving bitcoin to Solana. Coinbase-to-Base bitcoin transfers are free; Coinbase-to-Solana bitcoin transfers cost 40 cents.

CoinDesk is an independent operating subsidiary of Digital Currency Group, which owns Grayscale, Genesis and CoinDesk.

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