Coinbase Introduces Wrapped Staked Eth Utility Token

Cryptocurrency exchange Coinbase has recently unveiled that it has introduced its own liquid staking token, Coinbase Wrapped Staked ETH (cbETH), in anticipation of the September Merge of the Ethereum blockchain.

Following the Merge, the token can be used to stake ether (ETH), the network’s native currency, on Coinbase. The tweet indicates that the token will be Ethereum-based.

With liquid staking, investors can earn a return on their holdings in addition to the traditional rewards for staking or locking coins in a network.

Meanwhile, Wrapped tokens allow the value of an asset to be transmitted between blockchains. For instance, Wrapped Bitcoin (WBTC) lets you use Bitcoin on Ethereum. Wrapped tokens traditionally track the price of the asset they represent, in this case, Bitcoin; therefore, it stands to reason that Wrapped Bitcoin’s price will follow the price of Bitcoin.

As such, users who stake Ethereum on Coinbase will be awarded cbETH, which is a liquid representation of the ETH they have staked.

According to a Twitter thread by Coinbase, cbETH is not supposed to mirror the price of Ethereum but rather represent staked ETH plus all of its accumulated staking interest commencing from June 16, 2022, the date Coinbase set the initial conversion rate and value for cbETH.

Note that the price of cbETH is NOT meant to track the price of ETH 1:1. cbETH represents staked ETH plus all of its accrued staking interest, starting from when cbETH's conversion rate and balance were initialized (June 16, 2022 19:34 UTC).
— Coinbase Assets 🛡️📞 (@CoinbaseAssets) August 24, 2022

A tradeable asset

What’s unique about cbETH is the fact that as opposed to staked ETH, which is temporarily locked until the Shanghai protocol upgrade is complete, this new utility token can be traded, transferred, and spent. Tokens issued by Coinbase can be transferred to an external wallet and then exchanged.

According to Coinbase cbETH can be used to liquidate staked Ethereum positions, pledged as security in the DeFi markets or sent to another user as a gift. Coinbase expects these use cases to boost the token’s utility and encourage its widespread use across protocols.

If all liquidity requirements are reached, trading of the liquid token will begin on August 25. Trading of the cbETH-USD trading pair will commence in stages once a significant supply of this asset is established, Coinbase stated.