- DefiLlama founder 0xngmi calls out Coinbase for not providing proof of reserves for cbBTC.
- Most cross-chain bridges offer transparency, but cbBTC falls short.
- DefiLlama refuses to list cbBTC due to unverifiable Total Value Locked (TVL).
- 0xngmi reaffirms commitment to apply the same standards across all projects.
DefiLlama Founder Critiques Coinbase’s Transparency on cbBTC
In a recent social media post on September 23, 2024, DefiLlama’s founder, known as 0xngmi, openly criticized Coinbase for its lack of transparency regarding its cross-chain Bitcoin product, cbBTC. According to the founder, Coinbase has failed to provide proof of reserves for cbBTC, a standard practice among cross-chain bridges like Wrapped Bitcoin (WBTC). The lack of transparency has led DefiLlama to withhold cbBTC from being listed on its platform, further fueling discussions about the importance of proof of reserves in decentralized finance (DeFi).
cbBTC Lacks Proof of Reserves
In his post, 0xngmi emphasized the widespread practice of cross-chain bridges offering proof of reserves. These proofs are critical as they allow users to verify whether issued tokens are backed by the necessary assets. Popular tokens like Wrapped Bitcoin (WBTC) rely on this system to build trust with users by demonstrating that every token issued is backed 1:1 by reserves.
However, 0xngmi pointed out that Coinbase has not followed this industry standard for cbBTC. He stated that Coinbase’s cross-chain Bitcoin offering falls “far below the standard” in terms of transparency, specifically criticizing the company’s failure to provide proof of reserves. This lack of visibility raises concerns about whether the issued cbBTC tokens are fully supported by actual Bitcoin reserves.
By not providing proof of reserves, Coinbase’s cbBTC raises red flags for platforms like DefiLlama, which track Total Value Locked (TVL) in DeFi protocols. TVL is a key metric used by investors and developers to gauge the value of assets staked or locked in a protocol. Without transparency, it’s impossible for DefiLlama—or its users—to verify how much value is actually secured by cbBTC
