Coinbase cryptocurrency exchange has introduced wrapped staked ETH (cbETH) with hopes that it will achieve robust adoption for trade, transfer, and use in DeFi applications.
In a statement on Wednesday, Coinbase stated that it would offer Coinbase Wrapped Staked ETH (cbETH) as an ERC-20 token on the Ethereum network, enabling users to use their staked ETH while receiving incentives on the exchange.
Users can withdraw their tokens to Coinbase, stake them, and then convert their ETH2 into cbETH, according to the company’s website, with the new wrapped staked token balance being displayed on their accounts. On August 25, “if liquidity conditions are met,” the tokens are anticipated to be available for trading.
According to Coinbase’s cbETH white paper, which was published in August, “our hope is that cbETH will acquire robust adoption for trading, transfer, and use in DeFi applications.”
Through the development of high-utility wrapped tokens and the open-sourcing of smart contracts, Coinbase hopes to contribute to the larger crypto ecosystem through cbETH.
The white paper states that while cbETH is “more extensively compatible with dApps in DeFi today due to the fact that they are ERC-20 compliant,” it will basically serve as a compound token, or cToken:
“ETH and cbETH are not pegged or expected to be interchangeable. In fact, as the underlying staked ETH continues to accrue rewards, each cbETH token is expected to represent more staked ETH, which may result in a divergence in prices for these assets over time.”
The network will be launched on the Beacon Chain with the Bellatrix upgrade beginning on September 6, according to a statement released by the Ethereum Foundation on Wednesday.
The Merge to Proof-of-Stake is anticipated to happen before September 20. In order to manage the move, Coinbase stated on August 16 that it would “temporarily suspend” deposits and withdrawals of ETH and ERC-20 tokens.