The Bitcoin Holder's Guide to wrapped BTC

Bitcoin runs on its own network. It doesn't understand Ethereum smart contracts, doesn't live on Base or Arbitrum and can't participate natively in the DeFi protocols built on those chains. To trade on a DEX, earn yield in a lending protocol or provide liquidity anywhere in the EVM ecosystem, you need a version of Bitcoin that those chains can read.

That's what wrapped BTC is: a token on another chain that represents Bitcoin, backed by actual BTC held somewhere.

The problem is "held somewhere" covers a lot of ground. Some wrapped BTC is held by a custodian - a company that takes your Bitcoin and issues you a token in return. Some is secured by decentralized cryptography with no single party in control. Some isn't just a representation of BTC at all - it's a yield-bearing position that earns rewards while you hold it.

Choosing the right version depends on what you're trying to do, which chain you're on, and how much trust you're willing to place in an intermediary.

The custodial versions: simple, liquid, trusted

The most straightforward wrapped BTC tokens are custodial: a regulated entity holds real Bitcoin in reserve and issues a 1:1 token on another chain. You trust them not to lose it, misuse it or get shut down.

wBTC (Wrapped Bitcoin)

The oldest and most liquid wrapped BTC on the market. BitGo holds the underlying BTC in custody and issues wBTC as an ERC-20 token. It's been the default for DeFi since 2019 - available on Ethereum, Arbitrum and most other major chains, with deep liquidity across Aave, Compound, Uniswap, Curve, and nearly every other DeFi protocol that matters.

When to use it: you want maximum protocol access and deepest liquidity. wBTC is the path of least resistance for using Bitcoin in established DeFi.

The tradeoff: BitGo is the custodian. If BitGo is hacked, faces regulatory action or fails as a business, wBTC holders are exposed.

cbBTC (Coinbase Wrapped Bitcoin)

Coinbase's version, launched in 2024. Coinbase holds the BTC, issues cbBTC as an ERC-20. It's available on Base (Coinbase's own L2), Ethereum and Arbitrum, and has grown quickly given Coinbase's institutional reputation and the growth of the Base ecosystem.

When to use it: you're already in the Base ecosystem or you prefer a custodian that's a publicly traded, regulated US company. cbBTC is the natural wrapped BTC for Coinbase users and Base-native DeFi.

The tradeoff: still custodial. You're trusting Coinbase - a well-regulated institution, but a single point of failure nonetheless.

BTCB (Binance Bitcoin)

Binance's wrapped BTC, issued on BNB Chain. If your DeFi activity is primarily on BSC - PancakeSwap, Venus and similar protocols - BTCB is the standard. Binance holds the underlying BTC.

When to use it: BSC ecosystem specifically. It has minimal presence outside BNB Chain.

The tradeoff: Binance custody. BTCB rarely makes sense outside the BSC context.

The decentralized version: trust-minimized, lower liquidity

tBTC (Threshold Bitcoin)

tBTC is the non-custodial alternative to wBTC - built by the Threshold Network using multi-party computation (MPC), a cryptographic technique that splits control of the underlying BTC across a decentralized set of nodes. No single party can move Bitcoin. To steal it, you'd need to compromise a supermajority of independent signers simultaneously.

When to use it: custodial risk is your primary concern. tBTC is the choice for Bitcoin holders who won't accept a single company holding their funds, regardless of liquidity tradeoffs.

The tradeoff: tBTC has lower liquidity than wBTC and fewer protocol integrations. It's also exposed to smart contract risk — the protocol itself is a potential attack surface, even without a custodian.

The yield-bearing versions: your BTC working while it sits

A newer category: these tokens aren't just representations of Bitcoin. They're positions that earn yield.

SolvBTC

Solv Protocol accepts BTC deposits and deploys them across a range of yield strategies - staking, lending and liquidity provision. When you deposit, you receive SolvBTC, which accrues value over time as the underlying BTC earns. The token can itself be used in other DeFi protocols.

When to use it: you want passive yield on your Bitcoin without managing strategies yourself. SolvBTC is for holders who are comfortable with the underlying protocol risk in exchange for yield.

The tradeoff: you're accepting both smart contract risk and the risk of the underlying yield strategies. SolvBTC is more complex than a simple wrapped token — understand what it's doing with your BTC before you hold it.

LBTC (Lombard)

Lombard allows Bitcoin holders to earn staking rewards by providing economic security to Proof of Stake networks. When you stake BTC via Lombard, you receive LBTC, a liquid representation of your staked position. LBTC can be used in DeFi while your BTC continues earning staking rewards underneath.

When to use it: you want to participate in Bitcoin staking and maintain liquidity at the same time. LBTC is the yield-bearing wrapped BTC for users who want to be part of the Bitcoin staking ecosystem.

The tradeoff: LBTC is a newer protocol. The staking mechanics via Babylon add a layer of complexity and smart contract risk that simpler wrappers don't have.

Comparison at a glance

What about native Bitcoin?

All of the above require you to give up your actual Bitcoin - to a custodian, a smart contract or a protocol - in exchange for a token that represents it. That's the tradeoff at the core of every wrapped BTC: you get DeFi access, but you accept some form of intermediary risk.

The alternative is keeping your BTC native, and this is a natural choice for some Bitcoin holders. Read an article to learn what is native BTC swap.

Use BOB Gateway to move your Bitcoin

In any case, moving between native Bitcoin and its wrapped versions requires using a reliable swap engine. BOB Gateway is one of the best options available in the market, because it's built and optimized specifically for BTC.

It's an intent-based swap engine where professional liquidity providers compete to fill each swap at the best available rate. All of the wrapped BTC assets above are accessible through BOB Gateway, as well as native BTC in and out across major EVM chains.

If you want to move between native BTC and any of these wrapped versions - or bypass wrapping entirely - that's what BOB Gateway is for.

Start swapping

BOB Gateway tutorial is available here