Coinbase To Start Issuing Wrapped ETH Staking Token cbETH

• Coinbase introduces its wrapped ETH staking token cbETH.
• Coinbase Wrapped Staked ETH (cbETH) is a utility token that represents ETH2.
• ETH and cbETH are neither pegged nor designed to be interchangeable 1:1.

Coinbase, the largest cryptocurrency exchange in the United States, announced on Twitter that it will launch its own liquid staking token known as Coinbase Wrapped Staked ETH (cbETH). The launch of cbETH is prior to the Ethereum merge that is anticipated to begin on September 6th.

The company said in the tweet:

Coinbase Wrapped Staked ETH (cbETH) is a utility token that represents ETH2, which is ETH staked through Coinbase. cbETH can be sold or sent off-platform, while ETH2 will remain locked-up until a future protocol upgrade.

Adding on, the Twitter post read that with cbETH, Coinbase aims to contribute to the broader crypto ecosystem through creating “high-utility wrapped tokens and open sourcing smart contracts.”

Given that ERC-20 tokens are now the most commonly interoperable with dApps in DeFi, the white paper of the stakingtoken suggests that cbETH will serve effectively as a compound token, also known as a cToken.

It is worth noting that ETH and cbETH are neither pegged nor designed to be interchangeable 1:1. Also, it is possible that the values of cbETH and ETH may diverge over time since each cbETH token will reflect an increasing amount of staked ETH as the underlying ETH continues to earn rewards.

The company concluded by stating that once this asset has a significant supply, trading of the cbETH-USD pair would start in stages, with support for cbETH being limited in certain regions. This comes after the Ethereum Foundation set the date for the merge on Wednesday.

Earlier, the Ethereum team had announced that the network would be launched on the Beacon Chain with the Bellatrix upgrade beginning on September 6. The merge to proof-of-stake is anticipated to take place before September 20.