Wrapped bitcoin compared: WBTC vs cbBTC vs tBTC vs LBTC

Wrapped bitcoin is a token on another blockchain backed one-for-one by BTC held by a custodian or signer network, and the wrappers differ most in who holds that BTC, who can redeem it and what it earns.

Wrapped bitcoin is a token issued on a smart contract chain such as Ethereum, Base or Solana that is backed one-for-one by real BTC held in reserve, so bitcoin can be used in lending markets, exchanges and vaults outside the Bitcoin network. WBTC is the largest wrapper, with about 116,000 BTC behind it on 24 September 2026, followed by Coinbase's cbBTC at about 98,000, according to CoinGecko. Together the eight largest wrappers held about 255,000 BTC, or 1.3% of all bitcoin in circulation. The wrappers look identical in a wallet, though each one rests on a different custodian or signer set and a different redemption route.

What is wrapped bitcoin?

Bitcoin can't run smart contracts, so it can't be deposited directly into an Ethereum lending market or a Solana exchange. A wrapper solves this by locking BTC with a custodian or a network of signers and minting an equal amount of tokens on the other chain. Burning the token releases the BTC again. The token tracks the price of bitcoin because it can be redeemed for bitcoin, and its price holds only as long as holders trust the reserve and the redemption route.

The first wrapper, WBTC, launched in 2019 under a merchant model run by BitGo. Coinbase launched cbBTC in September 2024, Kraken followed with kBTC in October 2024, and Circle put cirBTC live on its Arc network on 21 September 2026. Other wrappers use decentralised signers (tBTC) or add a yield strategy to the backing (LBTC).

Wrapped bitcoin compared

Supply from CoinGecko on 24 September 2026, except cirBTC (The Cryptonomist, 21 September). Custody and fee details from each issuer's site and docs, checked on the same day. The tBTC mint fee was reinstated at 0.2% on 15 April 2026, so comparisons listing a 0% mint fee are out of date (Threshold docs).

Supply has shifted since 2024. WBTC still leads, though cbBTC has closed most of the gap, and Base is its largest market: Morpho there alone held about $3.2 billion of cbBTC on 24 September 2026 according to DefiLlama. The three exchange-issued wrappers, cbBTC, kBTC and cirBTC, together backed about 108,000 BTC on 24 September 2026.

Where each wrapper earns yield

Supplying wrapped bitcoin to a lending market pays close to nothing, whichever wrapper it is, because few borrowers want BTC. The return on wrapped bitcoin comes from what it's used for, and only LBTC carries a yield inside the token itself.

Rates from DefiLlama's yields API and Lombard's docs on 24 September 2026. The Morpho rows read 0% because BTC there sits as collateral that borrowers post against stablecoin loans, which earns nothing by design.

LBTC's yield source changed in 2026. It launched as a liquid staking token for BTC restaked through Babylon, and Lombard's documentation now describes its yield as premiums from selling call options against the deployed part of the backing, managed by Bitwise Investment Manager, with the LBTC-to-BTC exchange rate rising as premiums accrue (Lombard docs). The target is a variable 2.5% net, and a covered-call strategy gives up gains above the strike in a sharp rally. That also explains why CoinGecko priced LBTC slightly above BTC on 24 September 2026.

For every other wrapper, yield comes from a strategy built on top. The most common is carry, where the BTC is posted as collateral, stablecoins are borrowed against it and deployed at a higher rate than the borrowing cost. Hedged strategies hold the wrapper and short BTC futures to collect funding. How to earn yield on bitcoin walks through each route and its risks.

Which wrapper does a BTC vault accept?

A vault accepts the wrapper its strategy can use, which usually means the one with the deepest markets on the chain where the strategy runs. A carry strategy needs lending markets that accept the wrapper as collateral at a sensible loan limit, and a hedged strategy needs a wrapper it can move between venues cheaply.

The Sentora BTC vault on Upshift shows how that choice plays out. Curated by Sentora, it takes WBTC on Ethereum because WBTC has the deepest collateral markets there, and runs a carry strategy: on 24 September 2026 it held about $3.9 million of WBTC as collateral on Morpho and had borrowed RLUSD and PYUSD against part of it to deploy into stablecoin strategies. Depositors keep their exposure in BTC terms while the stablecoin leg earns the spread, and holding the vault adds WBTC's custody risk to the strategy's own risks. The current rate is on the vault page.

Is wrapped bitcoin safe?

Wrapped bitcoin carries risks that native BTC in a self-custodied wallet doesn't. A holder is trusting that the reserve exists, that the custodian or signers won't lose or misuse it, and that redemption keeps working.

• Custodian risk: for WBTC, cbBTC, kBTC and cirBTC, a single company or group holds the BTC. Coinbase, Kraken and Circle are regulated, which gives holders a legal claim, though the claim depends on that company's solvency and conduct.
• Governance risk: in August 2024 BitGo announced it would move WBTC to multi-jurisdictional custody with BiT Global, a firm linked by critics to Justin Sun. BitGo said WBTC stayed operationally separate, and MakerDAO (now Sky) voted to reduce its WBTC exposure in response, which showed how quickly a custody change can move a wrapper's standing in DeFi.
• Signer and bridge risk: tBTC and FBTC spread control across signers, which removes the single custodian but adds the risk of the signing protocol. WBTC and cbBTC on chains other than their home chain often move through a cross-chain bridge, which adds that bridge's contracts.
• Redemption access: for most wrappers only approved institutions or account holders can redeem directly. Other holders exit by selling on a DEX, so the price can slip below BTC in a stressed market even when the reserve is intact.
• Smart contract risk: the token contract, and any lending market or vault it sits in, can have bugs.

Always make sure to do your own research and be aware of the above and any other risks before depositing.

WBTC vs BTC

WBTC and BTC trade at the same price, and the difference lies in what each can do and what each depends on. BTC on the Bitcoin network can be held with no counterparty at all, and it can't be used in Ethereum DeFi. WBTC can be lent, borrowed against and deposited in vaults on Ethereum and other chains, and it depends on BitGo's custody, the merchant network and the token contract. Wrapped bitcoin suits holders who want to use BTC in DeFi, and adds risk for holders who only want to hold it.

On the market, the two have tracked each other closely. Over the 12 months to 24 September 2026, WBTC's daily close on Binance's WBTC/BTC market stayed within 0.3% of one BTC on 97% of days and never closed more than 0.4% away. It did close slightly below one BTC on 84% of days, a small but persistent discount consistent with the cost and time of redeeming through a merchant, and its lowest intraday print was 0.992 BTC on 11 October 2025, the day after the market-wide liquidation.

How to convert wrapped bitcoin back to BTC

The route back to BTC depends on the wrapper and on who is holding it:

• cbBTC: send it to a Coinbase account, where it's converted to BTC one-for-one.
• kBTC: redeem through a Kraken account.
• tBTC: redeem directly through the Threshold bridge for a 0.2% fee, with no account needed.
• LBTC: redeem through Lombard, which takes up to 10 days.
• WBTC and FBTC: only approved institutions redeem directly, so most holders swap to BTC on an exchange or send the token to an exchange that supports it.

Frequently asked questions

What is wrapped bitcoin?

A token on another blockchain, such as Ethereum, backed one-for-one by BTC held in reserve, so bitcoin can be used in DeFi. WBTC and cbBTC are the two largest.

Is it safe to buy wrapped bitcoin?

It adds custodian, redemption and smart contract risk on top of bitcoin's price risk. The size of that risk depends on who holds the reserve and how redemption works for that wrapper.

Is cbBTC safer than WBTC?

They carry different risks. cbBTC relies on Coinbase alone, a listed and regulated US company. WBTC relies on BitGo and its custody partners, has the longer track record and has deeper DeFi liquidity on Ethereum.

Is WBTC safe to hold long term?

WBTC has held its backing since 2019, and holding it long term means relying on BitGo, the WBTC DAO and the merchant network for that whole period. Holders who don't need DeFi access carry less risk in native BTC.

Does wrapped bitcoin earn interest?

Not on its own, except LBTC, which carries a covered-call yield inside the token. Other wrappers earn close to 0% in lending markets, so yield comes from carry, hedged or vault strategies built on top.

How much bitcoin is wrapped?

About 255,000 BTC across the eight largest wrappers on 24 September 2026, roughly 1.3% of bitcoin in circulation, according to CoinGecko.

Can wrapped bitcoin lose its peg?

Yes. If holders doubt the reserve or can't redeem easily, a wrapper can trade below BTC on exchanges, even briefly, until arbitrageurs with redemption access close the gap.

Keep reading

• How to earn yield on bitcoin. Carry, basis, staking and vault routes compared.
• What is FXRP. How Flare wraps XRP for DeFi.
• DeFi yield strategies. How carry and hedged strategies work.
• How onchain yield vaults are secured. Audits, access controls and policy engines.