Aave DAO presented a proposal to integrate the Coinbase exchange’s cbBTC into its V3 on Base and Ethereum mainnet.
СbBTC, Coinbase’s new Bitcoin wrapper offering, is slated for launch in the coming weeks. The exchange initiated plans for the product after the Wrapped Bitcoin (WBTC) controversy involving BitGo and Justin Sun.
Aave to Bring cbBTC On its V3 Protocol
Stani Kulechov, the founder and CEO of Aave and ETHLend, recently shared a proposal on X. He explained that Aave aims to become the “preferred protocol for supporting Tier-1 asset launches.” The proposal outlines how cbBTC (cross-chain Bitcoin) would offer more options for Bitcoin holders who want to participate in decentralized finance (DeFi) activities on Aave’s v3 platform.
“The introduction of cbBTC to Aave v3 will provide users with more choices for utilizing their Bitcoin holdings, increasing liquidity and engagement within the protocol,” the proposal read.
In addition, introducing cbBTC to Aave’s Ethereum-based decentralized, non-custodial protocol would provide users with access to Coinbase’s liquidity. This integration would also allow them to use Aave’s borrowing features. The collaboration between Coinbase and Aave is expected to attract more users and contribute to the overall growth of both platforms.
Read more: Wrapped Bitcoin (WBTC): A Beginner’s Guide
Coinbase’s plans for cbBTC emerged following the controversy surrounding WBTC. Users raised concerns over Justin Sun’s involvement, citing fears of improper influence over WBTC. Sun’s past issues with transparency and operations, particularly regarding TUSD and Huobi’s USDT reserves, fueled these worries.
“We recognize the community wants to know about Justin Sun’s involvement in anything, even though he can’t move funds. That’s why we made sure to be very clear about his name,” BitGo CEO Mike Belshe stated.
While Sun also tried to quell the concerns, users remain unsettled, which further exacerbates the tailwinds for Coinbase’s cbBTC product.
“With the ongoing changes with WBTC, it is pertinent to have alternative wrapped BTC tokens for use on Aave. With Coinbase as the issuer and custodian, their reputation will likely make [cbBTC] a trustworthy alternative to WBTC,” the Aave DAO proposal explained.
Meanwhile, Aave is strengthening its position in the lending and borrowing sector by offering a diverse range of high-quality assets. On Tuesday, it introduced an EtherFi market to its v3 protocol, enhancing liquidity between wrapped Ether (weETH) and stablecoins. This update also helps alleviate Aave’s borrowing limitations, making the platform more efficient for users.
Read more: Aave (AAVE) Price Prediction 2024/2025/2030
AAVE Price Performance. Source: BeInCrypto
These advancements have driven a significant surge in the value of the AAVE token, which has risen by more than 30% in the past month. BeInCrypto data shows that AAVE is trading for $151.61 as of this writing, up 10% since Wednesday’s session opened.
