Crypto exchange platform, Coinbase has launched a wrapped staked ETH token cbETH which includes several uses for trade, transfer, and DeFi application.
The Ethereum Merge is officially scheduled on 6th September. Many crypto giants are making their efforts to rule during the ETH merge. Regarding this, Coinbase is preparing for the upcoming Ethereum merge in September by launching its liquid-wrapped staked token, which will represent the total number of Ether (ETH) staked on the crypto platform.
Coinbase Entering Into The Merge Through cbETH
On Wednesday, Coinbase confirmed that it would be listing Coinbase Wrapped Staked ETH (cbETH) on the ERC 20 standard, using which crypto investors can earn rewards via their staked ETH as well as invest cbETH in place of their ETH. An investor’s assets get locked while staking, meaning they cannot be used. Many crypto investors have already started staking ETH ahead of the upcoming merge to earn rewards. Now Coinbase’s liquid wrapped token cbETH will offer investors to use and spend their staked ETH while earning rewards from them at the same time.
According to Coinbase’s whitepaper, in liquid staking, locked staked assets of users are in wrapped condition, and they are transferable tokens that represent the ownership of the underlying staked assets and any rewards if earned. The final tokens are fully transferable, and users can unwrap them to claim the underlying staked assets.
Coinbase stated, “Coinbase Wrapped Staked ETH (cbETH) is a utility token that represents ETH2, which is ETH staked through Coinbase. cbETH can be sold or sent off-platform, while ETH2 will remain locked-up until a future protocol upgrade.” If liquidity conditions are met, the cbETH token will be available on 25th August.
Robust Adoption Via cbETH
According to Coinbase’s white paper, cbETH will primarily function as a compound token, or cToken, and Coinbase revealed that they are the most widely compatible with dApps in DeFi today as they are ERC 20 compatible. Elaborating on this, Coinbase stated, “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 for the functionality of cbETH, Coinbase said, “ETH and cbETH are not pegged or expected to be interchangeable 1:1. 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.”
Final Thoughts
The Merge or Ethereum is the upgrade from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) mechanism, and it is to be finalized on 6th September. The main aim of the switch will significantly lower the network’s energy consumption.
Coinbase expects to spur massive token adoption as it will have several use cases after the Ethereum merge. Recently, Lido finance rolled out its layer two plans ahead of the merge. Crypto platforms worldwide are taking steps to utilize the Ethereum merge entirely. Coinbase has also planned to halt deposits and withdrawals of ETH and ERC 20 tokens as a precautionary measure to control the migration.
