In preparation for the Ethereum Merge transition, Coinbase unveiled its wrapped token base on the Ethereum network. The prominent America-based crypto exchange revealed the name of the wrap token as “Coinbase Wrapped Staked ETH (cbETH).”
Furthermore, traders can buy the cbETH or transmit it off-platform, though ETH2 will remain locked till there is a future protocol upgrade. The transfer of the new assets is only permitted on the Ethereum network. Coinbase warned that users shouldn’t send the token to other networks as it could cause a loss of their funds. However, the Ethereum protocol upgrade is expected to come up next year as subsequent upgrades are already taking place.
Coinbase claims that the newly initiated liquidity token is synonymous with the ETH2. This implies a type of ETH that can be staked using Coinbase. Due to its liquidity, there’s much room for flexibility regarding cbETH because users can send or swap the asset. The crypto exchange added that users could transfer or “gift” staked ETH, exit staked ETH, or submit it as collateral on DeFi(s).
Further emphasis indicates that the value of cbETH is not aimed at standing at an ETH 1:1 peg. Instead, the asset’s value will reflect the staked ETH, including its overall staking interest. This valuation mechanism will date back to June 16, 2022, marking the commencement of the assets conversion rate and balance.
Coinbase added that it would charge staking fees; the firm indicated that there wouldn’t be fees for wrapping or unwrapping the cbETH. Meanwhile, as part of the incentives for using the new asset, the firm also includes the inbound transfer of the cbETH in regions where trading is allowed. Also, there are strong indications that the trading of the assets could commence today if liquidity stipulations are met.
Upon realizing adequate distribution of the cbETH, the trading pair of CBETH-USD will commence. It’s imperative to note that the new asset might be restricted for utilization in some supported regions. Coinbase noted that it’s aiming to rival another product that is about to surpass 33% network penetration.
The firm made this known in the white paper of the cbETH. However, there are indications that the purported rival could be Lido’s liquid-staked ETH (stETH). The crypto exchange is confident of repeating its success with the USDC stablecoin with the cbETH. The firm is pushing to diversify the staking sector.
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