Coinbase introduces Wrapped Staked ETH: Here’s what you need to know

ambcrypto.com:

Popular crypto-exchange Coinbase announced on Wednesday the release of cbETH, its new wrapped and staked Ethereum ERC-20 token. The timing of this announcement is interesting, especially with the Ethereum Merge now on the horizon.

“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.”

According to the exchange’s tweet, the token will be Ethereum-based and following the Merge, it can be used to stake Ether (ETH), the network’s native currency, using Coinbase. In addition to receiving the usual incentives for staking or locking coins on the network, liquid staking enables investors to increase their yield.

The whitepaper added that while cbETH is “more extensively compatible with dApps in DeFi today because they are ERC-20 compliant,” it will serve as a compound token or cToken.

“ETH and cbETH are not pegged or expected to be interchangeable 1:1. 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.”

Other offerings that are anticipated to offer comparable services also exist, in addition to this liquid token. On 19 July, for instance, Lido Finance revealed that it would shortly start selling staked Ethereum on Layer 2 networks that operate more quickly and affordably than the Ethereum mainnet.

The Merge or Ethereum’s transition from a proof-of-work to a proof-of-stake consensus process is expected to be completed sometime between September 10 and 20. The switch will significantly reduce the energy used by the network.

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