U.S.-based cryptocurrency exchange Coinbase is taking a new step to increase asset diversity on its Base network. The company announced it will launch wrapped versions of Cardano (ADA), Dogecoin (DOGE), Litecoin (LTC), and Ripple (XRP) tokens on the Base network. These new assets will be named cbADA, cbDOGE, cbLTC, and cbXRP, and each will maintain a 1:1 peg to their original cryptocurrencies.
These new wrapped tokens will operate similarly to Coinbase's previously launched cbBTC on the Base network. Users will lock their original ADA, DOGE, LTC, and XRP assets into smart contracts, allowing them to mint these new tokens on the Base network. Thus, these popular cryptocurrencies will become more effectively usable on the Ethereum Layer-2 Base network.
Coinbase officials stated that the cbADA, cbDOGE, cbLTC, and cbXRP tokens have not yet been officially released and cautioned investors to remain vigilant against potential fraud. The tokens' official launch date will be announced in the coming days.
What is the Purpose Behind This Development?
Coinbase aims to enhance DeFi integration on the Base network and enable users to access decentralized applications with a broader range of assets. Moving high-volume altcoins like ADA, DOGE, LTC, and XRP to the Base network will increase liquidity and expand the use cases of applications built on Base.
How Does Coinbase's Wrapped Token Model Work?
- Users lock an asset, for instance, ADA, into a smart contract.
- In exchange, cbADA is minted on the Base network at a 1:1 ratio.
- Users can utilize cbADA in various DeFi protocols.
- cbADA can be burned at any time to reclaim the original ADA.
This model improves transaction efficiency and enriches the Ethereum ecosystem with additional assets.
This development clearly underscores Coinbase's commitment to the Base network and its growth ambitions within decentralized finance. With the introduction of these new tokens, Coinbase users can utilize assets like ADA, DOGE, LTC, and XRP with much greater flexibility.
