why coinbase introduced the cbeth token

Coinbase has announced plans to enable the Ethereum network to support Coinbase Wrapped Staked ETH (cbETH). So, users who stake ETH on Coinbase can receive cbETH, a liquid representation of their staked ETH in a wrapped version.

The cbETH token has the ERC-20 standard that will go live just before the Ethereum Merge in September. On August 25, depending on the liquidity conditions, the tokens will be available for trading.

An Alternative Before The Ethereum Merge

ETH2 will be locked until a future Ethereum update, which is likely as soon as 2023. In contrast, cbETH will be liquid, and users will be able to swap it or transfer it elsewhere. Coinbase claims that this will allow users to withdraw staked ETH, use the token as collateral in DeFi, and transfer or “gift” staked ETH.


According to Coinbase, cbETH transfers will only be available on the Ethereum network. It warns that sending this asset across other networks might result in the loss of your funds. Therefore, to separate it from payment tokens and other assets that can be subject to securities restrictions, the company refers to cbETH as a “utility token.”

Also, there are no expenses related to wrapping or unwrapping cbETH. However, there will be staking fees. According to Coinbase, cbETH is not meant to have a 1:1 price peg with ETH. Rather, it reflects staked ETH and interest accumulated since the business began cbETH’s conversion rate and balance on June 16th.

cbETH Whitepaper and stETH

Coinbase has also released a CBETH white paper, which explains the necessity for strong competitive liquid staking systems with “differentiated qualities.” Today, the Ethereum liquid staking market is controlled by a single solution that is on the verge of exceeding 33% network penetration. Coinbase also notes the success of USDC, the stablecoin created by the Centre consortium of Coinbase Global and Circle Financial. Furthermore, the exchange believes the trading platform’s trusted reputation will help cbETH expand.

At the moment, the liquid staking solution Lido offers a wrapped ether token called stETH. It has a market capitalization of $6.94 billion. stETH is Lido’s most valuable liquid staking asset. It also provides liquid staking solutions for Polkadot, Solana, Polygon, and Kusama. The platform used to provide Terra liquid staking services, however as the Terra blockchain ecosystem collapsed, Lido decided to stop the Terra-based service.

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