Coinbase Announces Wrapped Ethereum Staking Token With cbETH

The crypto world is gearing up for next month’s highly anticipated Ethereum Merge. In the lead up to the transition to Proof-of-Stake, Coinbase announced the launch of cbETH on Wednesday. It is an ERC-20 token that represents Staked Ethereum on the new Proof-of-Stake platform.

Trading Ethereum 2.0 on Coinbase

Coinbase Wrapped Staked Ethereum (cbETH) is a token that represents Ethereum 2.0 and can be traded on Coinbase. In this way, it is possible to stake Ethereum at Coinbase and then sell it as Ethereum 2.0 on the platform. Something that is not yet possible on the actual blockchain. “cbETH can be sold or even sent to its own wallet, while the real ETH2 tokens will remain under lock and key until the Merge,” Coinbase said of the new token.

A wrapped token is essentially a digital asset that makes it possible to move an asset from blockchain to blockchain. Staked Ethereum does not live on the current Ethereum blockchain, of course, but Coinbase now guarantees the value of the cbETH token as a centralized party. It is also possible to use Wrapped Bitcoin on Ethereum. In that construction, you have to send Bitcoin to a centralized party, who then distribute Wrapped Bitcoin tokens to you on the Ethereum blockchain.

The value of cbETH

Coinbase’s new cbETH token is not intended to track the Ethereum price in a 1:1 ratio. The token represents one Ethereum plus all staking rewards that the token has earned as of June 16, 2022. If everything goes according to plan, the value of cbETH will increase compared to the “normal” Ethereum.

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Customers who choose to discontinue their Ethereum via Coinbase will receive the cbETH ERC-20 token in their wallets in return. It is then up to them to choose whether to keep it or to trade in it. In this way, Coinbase makes the Ethereum Stake on their platform liquid, an option that other exchanges do not offer as yet.

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