Coinbase Introduces New Wrapped Token cbETH
- Coinbase recently announced that it would launch its own wrapped token before Ethereum’s highly-anticipated The Merge transition, called the Coinbase Wrapped Staked ETH (cbETH).
- While ETH2 will be locked up until a future protocol upgrade, which is expected as soon as 2023, cbETH can be traded or transmitted off-platform.
The United States crypto exchange giant Coinbase recently announced that it would launch its own wrapped token before Ethereum’s highly-anticipated The Merge transition.
On August 24, the exchange announced that it had decided to introduce a cryptocurrency called Coinbase Wrapped Staked ETH (cbETH) on the Ethereum network (ERC-20 token).
According to Coinbase, the new liquidity token represents ETH2, implying ETH staked through the exchange. While ETH2 will be locked up until a future protocol upgrade is expected as soon as 2023, cbETH can be traded or transmitted off-platform.
cbETH, on the other hand, will be liquid, allowing users to send or swap the asset. This will enable users to transfer or “gift” staked ETH, exit staked ETH, and use the token as collateral in DeFi, according to Coinbase.
It should be noted that the price of the token is not intended to mirror the cost of ETH 1:1. Beginning with the initialization of cbETH’s conversion rate and balance (June 16, 2022), cbETH represents staked ETH plus all of its accumulated staking interest.
The transfer of the new tokens will only be possible on the Ethereum network, according to Coinbase. “Do not send this asset over other networks, or your funds will be lost,” it warns.
Although staking fees will be charged, it continues; there are “no fees associated with wrapping or unwrapping cbETH.”
In regions where trading is supported, Coinbase offers inbound transfers for this asset. If liquidity requirements are satisfied, trading will start on August 25, 2022, at or after 9 AM PT.
Trading on its CBETH-USD trading pair will begin gradually after a sufficient supply of this asset has been established. In some supported jurisdictions, cbETH support might be restricted.
In its whitepaper, Coinbase admits its plans to compete with another product that is “on the verge of breaching 33% network penetration.” Most likely, Lido and its liquid-staked ETH (stETH) coin are that rival product. Based on its success in the USDC stablecoin, Coinbase thinks it can diversify the staking industry.
The statement is made weeks before the merge of Ethereum, which is set to start on September 6. During the event, Ethereum’s Proof-of-Work validation system will be replaced with Proof-of-Stake network validation.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
