Coinbase Launches Wrapped Staked ETH Token
- Called Coinbase Wrapped Staked ETH (cbETH), the new token will allow Coinbase customers to use their staked ETH while still earning rewards on the exchange.
- cbETH will not track the price of ETH as it represents the stacked token plus all of its accumulated staking interest, which will cause a “divergence” in the price of the two assets.
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Cryptocurrency exchange Coinbase is introducing its own liquid staking token, called Coinbase Wrapped Staked ETH (cbETH), to allow users to earn extra yield on their assets, the company said via Twitter on 24 August.
According to the announcement, cbETH will be launched as an ERC-20 token on the Ethereum network, giving users the ability to use their staked ETH while still earning rewards on the exchange. Expected to be available by the end of Thursday — “if liquidity conditions are met” — the token will be generated when a user stakes their ETH on Coinbase, and then wraps their ETH2 into cbETH. The developers of the token wrote in cbETH’s whitepaper:
“Our hope is that cbETH will achieve robust adoption for trade, transfer, and use in DeFi applications. With cbETH, Coinbase aims to contribute to the broader crypto ecosystem through creating high-utility wrapped tokens and open sourcing smart contracts.”
Coinbase noted on Twitter that cbETH are not meant to track the price of ETH as it represents the stacked token plus all of its accumulated staking interest, which may result in a “divergence in prices for these assets over time”. The token was developed to give users the ability to sell, transfer, and spend their staked ETH that will otherwise be locked until the Ethereum network’s upgrade.
Coinbase’s token was released just prior to Ethereum’s upgrade from Proof-of-Work consensus mechanism to Proof-of-Stake, also called The Merge, which increase the speed of the network and significantly lower its energy consumption. On Thursday, Ethereum developers revealed that the process will begin on 6 September with the launch of the Bellatrix upgrade, and is expected to finish sometime before 20 September.
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