Coinbase introduces wrapped staked ETH asset ahead of the Merge
Coinbase has launched a new asset in which Ether tokens are staked and wrapped through the crypto exchange.
In a Wednesday announcement, Coinbase said it will be listing Coinbase Wrapped Staked ETH (cbETH) on the Ethereum network as an ERC-20 token, allowing customers to use their staked Ether (ETH) while earning rewards on the exchange. According to its website, users can withdraw the tokens to Coinbase, stake them, and then wrap the ETH2 into cbETH, with the new wrapped staked token balance visible on their accounts. The tokens are expected to be available for trading on Aug. 25 “if liquidity conditions are met.”
“Our hope is that cbETH will achieve robust adoption for trade, transfer, and use in DeFi applications,” said Coinbase in its cbETH white paper released in August. “With cbETH, Coinbase aims to contribute to the broader crypto ecosystem through creating high-utility wrapped tokens and open sourcing smart contracts.”
Coinbase will add support for Coinbase Wrapped Staked ETH (cbETH) on the Ethereum network (ERC-20 token). Do not send this asset over other networks or your funds will be lost.What is cbETH? Let’s dive in pic.twitter.com/n3Dp4OA6HO
— Coinbase Assets (@CoinbaseAssets) August 24, 2022According to the white paper, cbETH will essentially function as a compound token, or cToken, given they are “most widely compatible with dApps in DeFi today due to the fact that they are ERC-20 compliant”:
“ETH and cbETH are not pegged or expected to be interchangeable. In fact, as the underlying staked ETH continues to accrue rewards, each cbETH token is expected to represent more staked ETH, which may result in a divergence in prices for these assets over time.”Related: Coinbase to increase transparency on potential 2022 listings
The Ethereum Foundation announced on Wednesday that the network will be activated on the Beacon Chain with the Bellatrix upgrade starting on Sept. 6, with the Merge to Proof-of-Stake expected before Sept. 20. Coinbase announced on Aug. 16 that it planned to “briefly pause” deposits and withdrawals of ETH and ERC-20 tokens “as a precautionary measure” to handle the migration.