Circle Internet’s (CRCL) packaged version of bitcoin, cirBTC, is live on Ethereum, as the company best known for its dollar-pegged stablecoin takes on Coinbase (COIN) for the synthetic’s dominance $BTC market.
The New York-based company said it developed cirBTC, a token backed 1:1 by the world’s largest cryptocurrency, to give traders access to their bitcoin wealth across decentralized finance (DeFi) protocols, including lending, decentralized exchanges (DEXs), tokenized assets and stablecoins.
Synthetic or wrapped Bitcoin tokens exist to address the historical lack of provision for DeFi activities on the Bitcoin network. Many cryptocurrency users prefer to hold only Bitcoin as it is worth more than all other cryptocurrencies combined. But using it for DeFi is challenging because Bitcoin lacks the native programmability of networks like Ethereum.
The first token to bridge the gap, Wrapped Bitcoin (wBTC), was introduced in 2019 and remains the largest, with a market capitalization of approximately $7.3 billion. Coinbase’s cbBTC (COIN), due in 2024, stands at just under $5.4 billion.
Circle pitches cirBTC to institutions that can focus their crypto allocation on this $BTC and are familiar with the company and trust its infrastructure due to its visibility in the stablecoin market. Circle’s USDC is the second largest stablecoin on the market with a cap of over $75 billion.
The introduction of cirBTC could see Circle go head-to-head with Coinbase and wBTC’s main custodian, BitGo Holdings (BTGO), for the dominance of the institutional synthetic sector. $BTC market.
The market capitalization of all synthetic bitcoin tokens combined ranges between $12.5 billion and $13.5 billion, which amounts to about 1% of bitcoin’s total value of about $1.25 trillion.