As the Ethereum Merge approaches, Coinbase has introduced cbETH (Coinbase Wrapped Staked ETH), a new ERC-20 token designed to represent staked Ethereum (ETH2) on its platform. This announcement marks a significant step in enhancing liquidity for staked assets while maintaining compliance with Ethereum’s post-Merge staking restrictions.
What Is cbETH?
- Utility Token: cbETH acts as a liquid counterpart to ETH2 staked via Coinbase, allowing users to trade or transfer their staked positions off-platform while ETH2 remains locked until Ethereum’s protocol upgrades permit withdrawals.
- Price Mechanism: Unlike traditional wrapped tokens (e.g., WBTC), cbETH’s value reflects staked ETH plus accrued staking rewards since June 16, 2022, when Coinbase set its initial conversion rate.
"cbETH can be sold or sent off-platform, while ETH2 remains locked until a future protocol upgrade."
— Coinbase Assets (Twitter)
Key Features of cbETH
- Liquidity for Stakers: Enables trading of staked ETH positions without waiting for Ethereum’s unlock.
- ERC-20 Compatibility: Integrates seamlessly with Ethereum’s ecosystem, including DeFi protocols.
- Progressive Rollout: Wrapping functionality is being released gradually to eligible users.
How Does Staking with cbETH Work?
- Users stake ETH via Coinbase to receive ETH2.
- ETH2 can be wrapped into cbETH through Coinbase’s platform.
- cbETH balances automatically accrue staking rewards, adjustable via a dynamic conversion rate.
| Term | Description |
|----------------|----------------------------------------------|
| ETH2 | Staked ETH (illiquid until protocol upgrade). |
| cbETH | Liquid ERC-20 token representing ETH2 + rewards. |
Regulatory Context
Coinbase faces scrutiny from U.S. regulators over securities listings and insider trading allegations. CEO Brian Armstrong has stated the platform would resist protocol-level censorship demands, calling such scenarios “hypothetical” but contentious.
"We’d focus on the bigger picture, potentially exploring legal challenges."
— Brian Armstrong (Tweet)
FAQs
Q1: Can cbETH be traded on other exchanges?
A: Yes, once off-platform transfers are enabled.
Q2: How are cbETH rewards calculated?
A: Rewards accrue based on Ethereum’s staking APR, compounded from the initial conversion date.
Q3: Is cbETH available globally?
A: Support may be restricted in some jurisdictions due to regulatory constraints.
👉 Learn more about Ethereum staking
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