cbETH will act as a liquid wrapped token, allowing users to move their staked ETH.
- Coinbase intends to allow users to circulate cbETH, otherwise the pledged ETH may be locked until 2023.
- Coinbase announced cbETH, a liquid-wrapped token that will represent ETH staked on its platform.
The company said it will compete with another major liquidity staking platform, presumably Lido.
Coinbase announces Square will launch its own packaged token merger ahead of its upcoming launch.
Coinbase Announces cbETH
Coinbase announced on Wednesday that it will introduce an Coinbase Wrapped Staked ETH (cbETH) token.
The cbETH token represents ETH2, which in turn represents ETH staked on the exchange. ETH2 will remain locked until an Ethereum upgrade expected as early as 2023.
In contrast, cbETH will be liquid and users will be able to exchange cBETH Or send assets elsewhere. Coinbase notes that this will help users withdraw their staked ETH, use the token as collateral in DeFi, and transfer or “give away” staked ETH.
Coinbase warns that transfers of cbETH can only be done on the Ethereum network. “Do not send this asset over other networks or your funds will be lost,” it advised.
The company describes cbETH as a “utility token,” a term commonly used in To distinguish cryptocurrencies from payment tokens and other assets that may be subject to securities regulation.
It added that “there are no fees associated with wrapping or unpacking cbETH”, but staking will be charged cost.
Coinbase stated that the purpose of cbETH is not to maintain a 1:1 price peg to ETH. Instead, it represents the staked ETH and its accrued interest from the time the company initialized the conversion rate and balance of cbETH on June 16.
In its white paper, Coinbase admits that it plans to collaborate with another “soon to break 33% network penetration rate” ” product competition. The competing product could be Lido and its liquid collateralized ETH (stETH) token. Coinbase believes that based on successful participation in the USDC stablecoin, the staking market can be diversified.
Announcement weeks ahead of Ethereum merger scheduled to begin on September 6 held. The event will see Ethereum replace its proof-of-work mechanism with proof-of-stake network verification.
Disclosure: At the time of writing At the time, the author of this article owned BTC, ETH and other cryptocurrencies.
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