Crypto: Monad's Cbbtc Bridge May Add $5b In Bitcoin-backed Liquidity

Chainlink’s protocol enables Coinbase’s cbBTC to move from Base to Monad, boosting Bitcoin-backed liquidity into the layer-1’s DeFi ecosystem.

Chainlink has enabled transfers of Coinbase’s wrapped Bitcoin token, cbBTC, from Base to the Monad blockchain using its Cross-Chain Interoperability Protocol, enabling more than $5 billion worth of cbBTC to move into the Monad ecosystem.

According to Monday’s announcement from Monad, the integration brings cbBTC into the Monad DeFi ecosystem, where a bevy of applications, including Curvance and Neverland, are adopting cbBTC markets.

The move introduces Bitcoin-backed liquidity to lending, borrowing, and other decentralized finance (DeFi) applications on Monad, an EVM-compatible layer-1 blockchain designed for high-throughput trading and financial use cases.

“As Bitcoin-backed assets grow into the tens of billions, the infrastructure moving them has to meet that scale,” said William Reilly, head of strategic initiatives at Chainlink Labs. CCIP was built with multiple layers of decentralized validation to reduce cross-chain risks and maintain consistent 1:1 backing across networks, he added.

Monad touts throughput of up to 10,000 transactions per second and sub-second finality, positioning itself as infrastructure for transaction-intensive financial applications.

Coinbase launched cbBTC in September 2024 as a wrapped Bitcoin token on Ethereum and Base, backed 1:1 by BTC held in custody and designed to automatically mint and redeem against Bitcoin deposits on the exchange.

Related: Bitcoin company Fold pays off $66M debt, frees up BTC collateral

Unlike proof-of-stake networks such as Ethereum (ETH) and Solana (SOL), where users can earn rewards by staking tokens, Bitcoin’s proof-of-work design does not natively generate yield. That constraint has historically limited onchain income options for holders of the biggest cryptocurrency, but new financial structures have started to address the gap.

In May, Solv Protocol co-founder Ryan Chow said demand for Bitcoin yield strategies is accelerating, particularly among companies seeking liquidity without selling Bitcoin. He pointed to proof-of-stake integrations and delta-neutral trading strategies as expanding ways Bitcoin can generate returns while supporting network security and liquidity.

Source: CoinTelegraph