Coinbase Introduces cbETH On Ethereum Network
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Coinbase Wrapped Staked ETH on Ethereum Network
In contrast, cbETH will be liquid, and users will be able to send or swap the asset. It will enable users to transfer or "give" staked ETH, exit staked ETH, and use the token as collateral in DeFi, according to Coinbase. Coinbase alerts that transfers of cbETH will only be possible on the Ethereum network.
"Do not send this asset over other networks, or your funds will be lost," it advises.
The company refers to cbETH as a "utility token" to separate it from payment tokens and other assets that can be subject to securities restrictions. Although staking costs will be charged, it also states that "no expenses connected with wrapping or unwrapping cbETH."
The wrapping functionality will be "rolled out to eligible users gradually throughout the day," according to Coinbase, which said that holders of staked ETH or ETH2 could "wrap" their ETH2 and obtain cbETH through the Coinbase website.
Trading of cbETH-USD Pair Starts in Stages
The company claims that trading the cbETH-USD pair would begin in stages once this asset is sufficiently supplied, with support for cbETH getting restricted in some jurisdictions. According to Coinbase, cbETH does not intend to keep a price peg with ETH at a 1:1 ratio. Instead, it reflects ETH stakes and any interest accrued since the business initialized the conversion rate and balance for cbETH on June 16.
Coinbase notes in its whitepaper that it intends to compete with a different product "on the cusp of breaching 33% network penetration." Most likely, Lido and its liquid-staked ETH (stETH) coin are those rival products.
Based on its success in the USDC stablecoin, Coinbase thinks it can diversify the staking industry. The statement comes only days before the subsequent Ethereum merger, which will start on September 6. The Proof-of-Stake (PoS) network will replace Ethereum's Proof-of-Work (PoW) validation system during the event.