The cryptocurrency exchange Coinbase has introduced a new liquid staking ethereum derivative token ahead of Ethereum’s proof-of-stake (PoS) upgrade. Coinbase wrapped Ethereum, also known as CBETH is the new utility token for ERC20. It will enable people to trade or stake their ERC20 tokens in an open-market manner.
Coinbase Reveals CBETH Liquid Staking Solution
Coinbase Global, Nasdaq:COIN, announced on August 24 the launch of an ERC20 token named coinbase wrapped Ethereum. It was launched two weeks ahead of the anticipated Ethereum upgrade known by The Merge. Essentially, Coinbase is enhancing the company’s staking services by leveraging the same method as Lido, a liquid staking competitor. Lido provides market participants with an ether token wrapped in ether called lido stakedether (STETH).
Coinbase will now support Coinbase Wrapped Stocked Ethereum (cbETH), which is a token that can be used to send ETH over the Ethereum network. You will lose your funds if you send the asset to other networks.
What exactly is cbETH, you ask? Let’s dive in 🧵👇 pic.twitter.com/n3Dp4OA6HO
— Coinbase Assets (@CoinbaseAssets) August 24, 2022
“All staked-ETH is locked until a future Ethereum protocol upgrade is complete,” Coinbase explained on Tuesday. “In the meantime, Coinbase has created CBETH to give customers the option to sell, transfer, spend, or otherwise use their staked-ETH while it remains locked. Holders of CBETH will be able to move these tokens to a self-custodied wallet and trade them off the Coinbase platform.”
Coinbase says that the exchange will introduce a wrapping functionality on its platform and it also shared the ERC20’s contract address for CBETH. At the time of writing, there’s a total supply of 642,831 CBETH and 354 holders so far. Coinbase also explained that CBETH cannot be valued 1:1 with Ethereum (ETH). “Note that the price of CBETH is NOT meant to track the price of ETH 1:1,” Coinbase explains. “CBETH represents staked ETH plus all of its accrued staking interest, starting from when CBETH’s conversion rate and balance were initialized [on] June 16, 2022, 19:34 UTC.”
CBETH White Paper Claims ‘Liquid Staking Market on Ethereum Is Dominated by a Single Solution’
Coinbase has also published a CBETH white paper and the paper explains that there’s a need for strong competing liquid staking solutions with “differentiated qualities.” “Today the liquid staking market on Ethereum is dominated by a single solution that is on the verge of breaching 33% network penetration.” Coinbase also mentions that the success of usd coin (USDC), the stablecoin issued by Coinbase Global’s and Circle Financial’s Centre consortium, and the exchange believes the trading platform’s trusted reputation will help CBETH grow.
Presently, the liquid staking solution Lido offers a wrapped ether token called STETH and the token’s market capitalization today equates to 0.65% of the $1.09 trillion crypto economy. STETH is Lido’s largest liquid staking asset in terms of valuation, but it also offers liquid staking solutions for Polkadot, Solana, Polygon, and Kusama. The platform used to offer Terra liquid staking, but the Terra blockchain ecosystem collapsed and Lido ended the Terra-based service.
Are you a fan of Coinbase’s wrap-around liquid staking product CBETH, or are you against it? Please comment below to let us know your thoughts on this topic.
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