Coinbase Announces Staking Token for Wrapped Ether Ahead of the Ethereum Merge


Cryptocurrency exchange Coinbase has announced the introduction of a new liquid staking token called Coinbase Wrapped Staked Ether or “cbETH”. The cbETH is an ERC-20 utility token and shall be available to customers who stake Ether on Coinbase. Other users can withdraw their Ether to Coinbase, stake them, and then wrap the ETH2 into cbETH. Coinbase stated that all staked ETH have been locked until the future upgrade on the Ethereum protocol. The announcement comes just three weeks ahead of the scheduled Merge upgrade on the Ethereum mainnet.

The cbETH token will “give customers the option to sell, transfer, spend, or otherwise use their staked-ETH while it remains locked.” In the blog post, Coinbase further explained, “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.”

As a matter of caution, the exchange explained, “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.”

Coinbase also noted that the cbETH doesn’t track the price of ETH 1:1. It just represents staked ETH in addition to all of the accrued staking interest. Since each cbETH token represents more staked ETH, it could result in “a divergence in prices for these assets over time.”

The exchange started offering Ether staking to retail players last year. Earlier this month, they also started offering ETH staking to institutional players.

Meanwhile, the Ethereum Merge upgrade is coming pretty close to a final date. The Ethereum Merge event will happen in two different instances. The Bellatrix upgrade will happen on the Beacon Chain on September 6. Similarly, the Paris upgrade will happen on the execution layer on September 15.

Source link