WBTC vs. cbBTC: A Cross-Chain Quest to Extend Bitcoin’s Utility

Key takeaways

• Packaging Bitcoin ( as WBTC and cbBTC ) extends the usability of Bitcoin beyond the original network, enhancing cross-chain accessibility and interoperability.
• Wrapped Bitcoin uses different custody models and governance structures, ranging from fully centralized issuance ( such as cbBTC) to decentralized smart contract-based systems ( such as Threshold tBTC)
• WBTC currently has a maximum supply of about 129,000 BTC( ), but cbBTC is growing rapidly on Base and Solana ( about 43,000 BTC), which together exceed 172,000 wrapped bitcoins
• Wrapped Bitcoin is widely used in the DeFi space, with WBTC dominating Ethereum DEXs, while cbBTC is more active on platforms like Aerodrome, with over $7 billion of WBTC and cbBTC locked in lending protocols.

Introduction

The scarcity of Bitcoin and its predictable monetary policy make it an ideal “store of value,” with ownership increasingly shifting to long-term holders, ETFs, and publicly listed companies. However, this large-scale “hoarding” phenomenon has led to the underutilization of native tokens worth approximately $2 trillion.

To address this situation, various products have emerged, aiming to unleash the productivity of Bitcoin. From Bitcoin-based lending services ( such as those in collaboration with Morpho or Bitcoin credit tools provided by Maple Finance ), to L2 solutions that expand Bitcoin functionalities, wrapped Bitcoin that enables cross-chain interoperability, and enterprise financial tools, all are dedicated to enhancing the practicality of Bitcoin.

This article explores the development of the tokenized Bitcoin ecosystem, focusing on how Wrapped Bitcoin(WBTC) and cbBTC can scale the utility value of BTC across chains.

Overview of Tokenized Bitcoin Products

The need to use Bitcoin on smart contract platforms has given rise to a range of tokenized Bitcoin ( also known as “Bitcoin derivatives” ). Among them, wrapped bitcoin is the largest category, representing a tokenized version of BTC issued on other blockchains, usually using a mint and burn mechanism, backed by escrow native bitcoin at a 1:1 ratio.

Wrapped Bitcoin aims to enhance the accessibility and interoperability of BTC, bringing programmability and low-cost execution capabilities that native Bitcoin does not possess. The main characteristics of Wrapped Bitcoin vary in terms of custody models, issuing entities, governance structures, and supported blockchain networks.

While these tokens share a common goal – to expand Bitcoin’s utility, the trust assumptions are very different. Current solutions include fully managed model (cbBTC), tBTC( based on the DAO multi-signature system )WBTC( and the )Threshold based on the distributed smart contract system. In all models, users are required to hand over bitcoin custody to a third party in order to receive the tokenized symbol.

In addition to the primary wrapped Bitcoin, liquid staking Bitcoin derivatives are also on the rise. For example, Lombard’s LBTC secures the proof-of-stake chain through the Babylon Protocol, enabling BTC holders to earn staking rewards.

WBTC and cbBTC Market Analysis

Since January 2023, driven by the rise in BTC prices and new cross-chain products, the market capitalization of wrapped Bitcoin has increased fivefold. The two largest tokens by market capitalization are WBTC and cbBTC, with a total supply of 172,000 coins.

As the first wrapped Bitcoin launched in 2019, WBTC has maintained a dominant position in the market. However, as the ownership of WBTC transfers in September 2024, market demand has weakened. Meanwhile, cbBTC is rapidly growing on Base, Ethereum, and Solana, filling the gap left by the decline of WBTC.

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

! [Coin Metrics: How Does WBTC and cbBTC Extend the Utility of Bitcoin?] ](https://img.gateio.im/social/moments-1958d096823379697c222d07581dfdec)

Bitcoin cross-chain applications

As Bitcoin surges on blockchains like Ethereum, Base, and Solana, on-chain activity showcases its actual role within these ecosystems. The number of active addresses reflects the breadth of user interaction with cross-chain tokenized Bitcoin.

cbBTC on Base leads the way here, with an average of around 7,000 daily active addresses, thanks to its wide distribution and low transaction costs. Solana is not far behind, with the number of active addresses continuing to grow since April, also thanks to its inexpensive, high-throughput infrastructure. Ethereum’s participation appears to be limited to larger, but less frequent, transactions, suggesting that although a large portion of cbBTC and WBTC are located on Ethereum, they are less active than Base and Solana.

The trading activity (, trading volume, and token transfer volume ) also show a similar trend. The cbBTC on Base performs outstandingly, with an average weekly transfer volume of about $40 billion, far exceeding the transfer volume of WBTC on Ethereum, which is about $1 billion.

The circulation speed further verifies this trend, measuring the turnover frequency of tokenized Bitcoin relative to its supply. The highest trading volume of cbBTC is on Base, followed by Solana and Ethereum. All wrapped Bitcoin variants show a higher circulation speed than native Bitcoin, highlighting their role in driving on-chain application activity.

Wrapped Bitcoin applications in DeFi

The demand for wrapped bitcoin is mainly due to its ability to unlock on-chain financial services that are not possible under the umbrella of bitcoin. As an important part of DeFi, WBTC and cbBTC enable users to trade, borrow, and provide liquidity without having to sell Bitcoin.

On Ethereum, WBTC remains the dominant wrapped Bitcoin in the DEX market, primarily trading on Uniswap v3. Although cbBTC is also traded on Ethereum DEX, its scale is relatively small. To access applications on Ethereum’s scaling solutions, WBTC is often bridged to L2, while cbBTC is natively issued on Base and Solana for broader cross-chain use.

In contrast, cbBTC plays a more important role in the L2 ecosystem, especially on Base, which is the leading tokenized Bitcoin in DEX activity. Most of the transactions took place at Aerodrome, with a trading volume of more than $2.5 billion at the beginning of 2025, followed by Uniswap v3 on the Base chain.

! [Coin Metrics: How Does WBTC and cbBTC Extend the Utility of Bitcoin?] ](https://img.gateio.im/social/moments-a7c67bd14b900dc6061a00d221f8efd7)

In addition to trading, wrapped BTC is also an important component of the Ethereum lending market. 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, the $WBTC(50 billion ) and $cbBTC(20 locked in these protocols ) more than $7 billion, reflecting the growing demand for Bitcoin lending.

However, there are drawbacks to packaging Bitcoin as collateral in different versions. Custody models such as cbBTC and WBTC may have centralization risks. Users need to weigh these risks against the liquidity and utility that comes with wrapping Bitcoin.

Conclusion

Despite Bitcoin’s entrenched role as a store of value, tokens such as WBTC and cbBTC continue to expand their usefulness. With these products, Bitcoin can be transferred across chains, participate in on-chain finance, and integrate into new execution environments. While different trust assumptions have been introduced, market adoption has demonstrated the need to increase Bitcoin’s versatility. With the development of technologies such as rollups and sidechains, tokenized Bitcoin is likely to continue to serve as a key bridge between Bitcoin’s monetary reserve status and other network-programmable economies.