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Crypto Exchange Coinbase to Offer Liquid Staking Token Before Ethereum Merge
The Coinbase Wrapped Staked ETH (cbETH) will have several uses, including selling and transferring staked ETH as well as using it as collateral in DeFi protocols.
Coinbase (COIN) will offer its own liquid staking token, called Coinbase Wrapped Staked ETH (cbETH), ahead of the Ethereum blockchain’s Merge in September, the crypto exchange said in a tweet Wednesday.
The token will be Ethereum-based and, after the Merge, can be used to stake ether (ETH), the native token of the blockchain, through Coinbase, according to the tweet. Liquid staking allows investors to generate extra yield on top of standard rewards for staking or locking coins in a network.
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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 Assets 🛡️ (@CoinbaseAssets) August 24, 2022
What is cbETH? Let’s dive in 🧵👇 pic.twitter.com/n3Dp4OA6HO
In liquid staking, locked staked assets are “wrapped” into transferable tokens that represent ownership of the underlying staked assets and any rewards earned, Coinbase said in a white paper. The resulting tokens are fully transferable and can be unwrapped to claim the underlying staked assets.
Aside from this liquid token there have been other services that are expected to provide similar services. On July 19, Lido Finance said it will soon offer staked ether on layer 2, or companion, networks, which process transactions faster and more cheaply than the Ethereum mainnet.
Read more: What Is the Ethereum Merge?
The Merge, which is Ethereum’s upgrade from a proof-of-work consensus mechanism to proof-of-stake, is slated to be finalized at some point between Sept. 10-20. The switch will substantially lower the network’s energy consumption.
Read more: Top Questions About Proof-of-Stake and Staking Answered
Coinbase is hoping to spur massive adoption of the token, which will have several uses after the Merge. “Our hope is that cbETH will achieve robust adoption for trade, transfer, and use in DeFi [decentralized finance] applications,” according to the white paper. “With cbETH, Coinbase aims to contribute to the broader crypto ecosystem through creating high-utility wrapped tokens and open sourcing smart contracts,” the white paper added.
Separately, cbETH investors will be able to exit their staked ETH for cash as well as transfer their staked ETH to another non-custodial wallet, according to the white paper.
Trading of the liquid token will start on Aug. 25, if all liquidity conditions are met, Coinbase said in a tweet thread. Once sufficient supply of this asset is established, trading of cbETH-USD trading pair will begin in phases, the thread added.
Read more: Crypto Derivatives Traders Bet on Ether Staking Yields Doubling to 8% Post-Merge
Aoyon Ashraf
Aoyon Ashraf is CoinDesk's managing editor for Breaking News. He spent almost a decade at Bloomberg covering equities, commodities and tech. Prior to that, he spent several years on the sellside, financing small-cap companies. Aoyon graduated from University of Toronto with a degree in mining engineering. He holds ETH and BTC, as well as ALGO, ADA, SOL, OP and some other altcoins which are below CoinDesk's disclosure threshold of $1,000.
