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Friday, June 9, 2023

Coinbase Launches Wrapped Ethereum Liquid Staking Token Ahead of The Merge

Coinbase Launches Wrapped Ethereum Liquid Staking Token Ahead of The Merge – About two weeks prior to the much-anticipated Ethereum upgrade known as The Merge, Coinbase Global (Nasdaq: COIN) announced the release of a new ERC20 token called coinbase wrapped ethereum (CBETH) on August 24.

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By using the same strategy as Lido, a competitor in the liquid staking market, Coinbase is essentially improving the company’s staking offerings. A wrapped ether token known as lido staked ether (STETH) is another service offered by Lido to market participants.

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On Tuesday, Coinbase stated: “All staked-ETH is locked until a future Ethereum protocol upgrade is complete.” To provide consumers the chance to sell, transfer, spend, or otherwise use their staked-ETH while it is locked, Coinbase developed CBETH in the meantime. CBETH holders will be able to transfer their tokens to a self-managed wallet and conduct trading outside of the Coinbase platform.

Coinbase said that it would add a wrapping feature to its platform and provided the ERC20 contract address for CBETH. As of this writing, there are now 354 holders and a total supply of 642,831 CBETH. Additionally, Coinbase explained that CBETH is not intended to have a 1:1 value with ethereum (ETH).

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Coinbase clarifies that the price of CBETH “is NOT designed to track the price of ETH 1:1.” Beginning with the initialization of CBETH’s conversion rate and balance on June 16, 2022, 19:34 UTC, “CBETH represents staked ETH plus all of its collected staking interest.”

A CBETH white paper by Coinbase has also been released, and it underlines the necessity for strong, competitive liquid staking options with “differentiated features.” “A single solution that is about to surpass 33% network penetration currently controls the liquid staking market on Ethereum.”

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Additionally, according to Coinbase, the growth of CBETH will be aided by the success of usd coin (USDC), the stablecoin created by the Coinbase Global and Circle Financial Center consortium. Currently, the wrapped ether token STETH, offered by the liquid staking service Lido, accounts for 0.65% of the $1.09 trillion cryptocurrency market capitalization.

In terms of valuation, STETH is Lido’s most valuable liquid staking asset; nevertheless, it also provides liquid staking options for Polkadot, Solana, Polygon, as well as Kusama. The platform previously provided Terra liquid staking services, but Lido chose to stop the Terra-based business once the Terra blockchain ecosystem crashed.

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