Coinbase Launches cbADA cbLTC on Base for DeFi Access

Coinbase has launched cbADA and cbLTC on its Ethereum layer-2 network Base, enabling Cardano and Litecoin holders to access the decentralized finance (DeFi) ecosystem. These wrapped assets are backed one-to-one by ADA and LTC in Coinbase custody, with regular proof-of-reserves to ensure the claims are valid. Over 11,300 wrapped LTC and 2.9 million wrapped ADA have already been minted on Base and are actively circulating.

These wrapped tokens, cbADA and cbLTC, are fully backed by ADA and LTC locked in Coinbase custody. They are minted and burned on demand at a one-to-one ratio, ensuring that the value of the wrapped tokens is always equivalent to the value of the underlying assets. This mechanism allows Cardano and Litecoin holders to participate in Ethereum-style DeFi activities without having to sell their original tokens.

Wrapped tokens solve the interoperability issue between different blockchains. ADA and LTC are native to their respective blockchains and cannot be directly used on Ethereum or its layer-2 networks, such as Base. By wrapping these tokens, holders can interact in on-chain activities like yield farming, liquidity pools, trading, and lending, all while retaining their original tokens.

Base's total value locked (TVL) is just over $3 billion. Ecosystem projects may offer liquidity mining incentives for these newer assets to capture value and generate fees. This move by Coinbase creates one of the most comprehensive cross-chain ecosystems in layer 2, as it has previously issued versions of bitcoin, ether, XRP, and dogecoin on Base.

This development is significant for the DeFi ecosystem as it allows for greater interoperability between different blockchain networks. By enabling Cardano and Litecoin holders to access Ethereum-style DeFi, Coinbase is expanding the utility of these assets and providing more opportunities for users to engage in decentralized financial activities. The regular proof-of-reserves ensures that the wrapped tokens are fully backed by the underlying assets, providing an additional layer of security and trust for users.