Coinbase launches wrapped Ethereum staking token cbETH ahead of merger

Coinbase launches wrapped Ethereum staking token cbETH ahead of merger

Coinbase launches wrapped Ethereum staking token cbETH ahead of merger

Coinbase has announced plans to add support for Coinbase Wrapped Staked ETH (cbETH) to the Ethereum network. The cryptocurrency exchange allows customers who stake ETH to receive a liquid representation of their staked ETH – Coinbase Wrapped Staked ETH.

cbETH is an ERC20 utility token that will be introduced just before the Ethereum blockchain merge in September. If the liquidity conditions are met, the tokens should be available for trading on August 25.

cbETH to DeFi

According to the whitepaper, cbETH can be minted or burned at a floating conversion rate. Its contracts will be open source and the audits will be published publicly. This should allow other entities, including DeFi protocols, to make informed decisions about adding support for the token.

With the latest move, Coinbase’s goal is to drive mass adoption of the token and expects to have multiple post-merger use cases for trading, transferring, and using in DeFi applications. cbETH can be used by investors to exit their staked ETH for cash, transfer their staked ETH to another noncustodial wallet, and deposit the cbETH in a protocol as collateral, according to the whitepaper.

cbETH is designed to work as a cToken or compound token to make it compatible with existing decentralized applications in the DeFi space. It is also important to note that ETH and cbETH are not related and therefore are not interchangeable 1:1. In fact, he represented has staked ETH in addition to all of its accrued staking interest from June 16 of this year, when Coinbase launched the cbETH conversion rate and balance.

“Over time, the price of cbETH will likely deviate from ETH because cbETH represents 1 staked ETH plus all of its accrued staking interest from the time the cbETH conversion rate and balance was initialized. cbETH is minted exclusively by Coinbase.cbETH can be sold or sent off-platform, while ETH2 will remain locked until a future protocol update.

Coinbase revealed that once a sufficient supply of cbETH is established, trading in the pair, cbETH-USD, will begin trading in phases. However, support for the asset may be limited in certain jurisdictions.

SEC vs. Coinbase

The latest development emerges following the U.S. Securities and Exchange Commission’s (SEC) launch of a new investigation against Coinbase.

The watchdog subpoenaed the exchange and demanded details on how it ranks and lists digital assets, its staking programs, stablecoins and yield-generating products. Previously, the agency filed a civil lawsuit against Coinbase, accusing it of listing nine securities as cryptocurrencies.

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