Coinbase’s cbBTC Token Awaits DefiLlama Listing Over PoR Issues

Key Points

• Critics, including DefiLlama’s founder, highlight the lack of proof of reserves (PoR) for the Coinbase cbBTC token, leading to its exclusion from the DefiLlama platform.
• Concerns are growing over the Coinbase cbBTC token, a wrapped Bitcoin product, as critics raise issues about the product’s transparency without a proof-of-reserve system.
• The cbBTC user agreement raises concerns about Coinbase’s reimbursement policy for lost Bitcoin.

Criticism Mounts Over Lack of Transparency for Coinbase cbBTC Token

0xngmi, founder of the DeFi dashboard DefiLlama, recently criticized the Coinbase cbBTC token for its failure to provide proof of reserves. This practice is typically utilized by cross-chain bridges, such as WBTC, to ensure that issued tokens are fully backed by underlying assets.

Due to the lack of transparency, 0xngmi stated that cbBTC will not be listed on DefiLlama, as the total value locked in cbBTC cannot be independently verified. He emphasized that DefiLlama applies this standard to all projects, including Coinbase, without exceptions.

Fast Market Adoption and Expansion Plans for cbBTC

Another significant concern in the crypto community is the cbBTC user agreement. The terms allegedly include a clause stating that Coinbase is not obligated to provide a full refund if Bitcoin is lost due to malicious behavior or unforeseen events. Instead, customers would receive a share of the remaining Bitcoin in proportion to their holdings, further fueling skepticism around the product.

In response to these concerns, Coinbase’s Chief Legal Officer, Paul Grewal, addressed the company’s position directly. He reaffirmed that if any underlying Bitcoin were to be lost, Coinbase would refund clients in an effort to dispel fears and uncertainty surrounding the new product.

Despite the criticisms, the Coinbase cbBTC token has rapidly gained traction, becoming the third most popular token within just seven days of its issuance, according to data from CryptoQuant. Coinbase has plans to extend cbBTC to the Solana blockchain following its successful launches on Ethereum and Base networks, which currently back the token 1:1 with Bitcoin.