Coinbase floats cryptocurrency before the Ethereum Merge

Crypto exchange Coinbase has launched Ethereum liquid staking token ahead of Ethereum’s migration to a proof of stake protocol.On August 24th, 2022, Coinbase confirms the release of their liquid staking token called Coinbase Wrapped Staked ETH (cbETH), on its official Twitter feed.

This new development is coming soon. It’s called the Ethereum Merge. This event will change the Ethereum blockchain to a different system that doesn’t use so much energy.

With the launch of cbETH, Coinbase users will be able to stake their ETH tokens on the Coinbase platform and earn rewards in return.

The exchange notes that the cbETH token is “100% backed by Coinbase Custody’s Insured ETH holdings.” Meaning that users’ funds are always safe. Coinbase also states that its staking service is available to all users in all jurisdictions, except for those in the United States.

As stated by the source, The Coinbase Wrapped Staked ETH (cbETH) is a benefit token that portrays ETH2. Which could be ETH staked via the Coinbase platform. Users can either sell or send cbETH off-the platform, while ETH2 will be locked up till a subsequent protocol upgrade.

The crypto exchange clarified that the price of cbETH would NOT be following ETH’s value of 1:1. Rather, cbETH is a combination of staked ETH and all the extra interest from staking. Starting from when cbETH’s conversion rate and balance were first set up.

Coinbase announced that owners of ETH2 (ETH on Coinbase staked) will be able to “wrap” their ETH2 and receive cbETH via its website. The Wrapping functionality will be gradually available to eligible users throughout the day. Coinbase says.

Liquid staking gives investors the chance to earn more rewards on top of what they usually get for locking coins in a network.

When you lock your staked coins, they are turned into tokens. These tokens represent ownership of the underlying staked assets and any rewards earned. The tokens you get from liquid staking can be transferred and used to redeem the assets you staked.

Coinbase’s liquid staking service will initially only be available for ETH2, though the firm plans to eventually add other assets. Coinbase’s service is the latest in a growing list of staking-as-a-service offerings from major crypto exchanges and wallet providers.

Last month, Binance announced that it would launch a similar service for its users. Coinbase’s main rival, Kraken, also offers a staking service.

The cbETH token generated by Coinbase will have various uses after Ethereum’s planned migration. According to the whitepaper, Coinbase says;

“Coinbase is hoping that cbETH will be used by lots of people for trading, transferring, and using in decentralized finance applications. By developing high-utility wrapped tokens and open sourcing crypto smart contracts, Coinbase is contributing to the crypto ecosystem.”

The Coinbase service is currently in beta, and the firm said it will launch “in the coming weeks.” Coinbase did not disclose how much it plans to charge for the service.

Liquid staking is a new way to stake your assets. You don’t have to lock them up for a fixed period. Coinbase has announced that it will offer rewards for people who stake their ETH through its service. It did not disclose what the rewards will be, but said they would be “competitive.”

Coinbase’s announcement comes as Ethereum’s DeFi sector has seen explosive growth in 2022. The value locked in Ethereum DeFi protocols has grown from $1 billion in January to over $13 billion currently, according to data from DeFi Pulse.

Coinbase’s move into Ethereum staking is the latest example of the company expanding its crypto-asset offerings.

In June, Coinbase launched support for Tezos (XTZ) staking, and earlier this month the firm announced that. It would add support for Filecoin (FIL) when the protocol launches. Coinbase has also been exploring ways to offer other services such as lending and borrowing.