Coinbase launches doge and XRP wrapped tokens, opening up a whole new (DeFi) world

Coinbase’s wrapped assets, cbDOGE and cbXRP, are now live on Base, its ethereum layer 2 network. The move will expand the cross-chain use of these tokens.

Simply put, wrapped tokens are digital assets representing cryptocurrencies on other chains. In this case, as Coinbase posted, “cbDOGE and cbXRP are ERC-20 tokens backed 1:1 by dogecoin and XRP held in custody by Coinbase.”

This “wrapping” allows the tokens to be used across different chains, and are essential in the DeFi space. As CoinGecko puts it, “Wrapped tokens offer a way to circumvent the lack of interoperability between different blockchains.”

Dillon Liang, cofounder of DeFi infrastructure company Blueprint Finance, told Sherwood News that these tokens going live on Base is another sign that interoperability is becoming table stakes in crypto. 

“These assets now have access to the growing Base ecosystem, meaning they can be used in DeFi apps, traded more easily, and add the potential for further utility in DeFi,” Liang said. 

Base data indicates that 2.3 million cbXRP and 10.4 million cbDOGE have been issued.

Coinbase launched a wrapped bitcoin last year, cbBTC, which now has a $4.7 billion market cap.

The platform is also set to launch a wrapped litecoin, cbLTC, and a wrapped ADA, cbADA, “soon.”

Alexander Blume, CEO of Two Prime Digital Assets, said these wrapped products are akin to making a bitcoin ETF so that bitcoin can operate within traditional financial rails. 

For Base, the advantage is that the tokens allow it to address a broader customer base and offer additional assets to trade, increasing usage of the Base L2, Blume said.

“Clearly, Coinbase is seeing demand from clients for this and so has responded by enabling this functionality,” he added.

The total market cap for wrapped tokens stands at $46.6 billion.