Coinbase has introduced a new token derived from Ethereum Liquid Staking ahead of the Ethereum proof-of-stake (PoS) upgrade. The new ERC20 utility token is called coinbase wrapped ethereum, or CBETH, and it will allow people to stake their ether in a non-conservative way or trade the tokens on the open market.
Coinbase unveils CBETH liquid staking solution
On August 24, Coinbase announced the launch of a new ERC20 token called coinbase wrapped ethereum (CBETH) about two weeks before the highly anticipated Ethereum upgrade known as The Merge. Essentially, Coinbase enhances the company’s staking services using the same method as Lido, a liquid staking competitor. Lido also provides market participants with a wrapped ether token called Lido staked ether (STETH).
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, 2022
“All milestones are locked until a future Ethereum protocol upgrade is complete“, Coinbase explained on Tuesday. “Meanwhile, Coinbase has created CBETH to give customers the ability to sell, transfer, spend or otherwise use their staked ETH as long as it remains locked. CBETH holders will be able to move these tokens to a standalone wallet and trade them off the Coinbase platform. “
Coinbase says the exchange will introduce a wrap feature on its platform and it also shared The ERC20 contract address for CBETH. At the time of writing, there is a total offering of 642,831 CBETH and 354 holders so far. In addition, Coinbase clarified that CBETH is not intended to be valued at 1:1 with ethereum. “Note that the price of CBETH is NOT meant to track the price of ETH 1:1“, Coinbase explains. “CBETH represents ETH wagers plus all its accumulated interest, from the time the conversion rate and CBETH balance were initialized. [on] 16 June 2022, 19:34 UTC“.
CBETH’s white paper states that “the market for liquid staking on Ethereum is dominated by a single solution.
Coinbase also published a CBETH white paper or the document explains that there is 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 exceeding 33% network penetration.“Coinbase also mentions that the success of usd coin (USDC)the stablecoin issued by Coinbase Global and Circle Financial. The exchange believes that the trading platform’s trusted reputation will contribute to CBETH’s growth.
Currently, the Lido liquid staking solution offers a wrapped ether token called STETH and the token’s market capitalization is now equivalent to 0.65% of the $1.09 trillion crypto economy. STETH is Lido’s largest liquid staking asset by valuation, but the platform also offers liquid staking solutions for Polkadot, Solana, Polygon and Kusama. At one time, the platform offered Terra liquid staking services, but since the implosion of the Terra blockchain ecosystem, Lido has decided to discontinue this service.