Coinbase has announced plans to add support for Coinbase Wrapped Staked ETH (cbETH) on the Ethereum network. The cryptocurrency exchange is allowing customers who stake ETH to receive a liquid representation of their staked-ETH – Coinbase Wrapped Staked ETH.
cbETH is an ERC20 utility token that will be introduced right before the Ethereum blockchain’s Merge in September. If the liquidity conditions are met, the tokens are expected to be available for trading on August 25.
cbETH in DeFi
According to the whitepaper, cbETH can be minted or burned as per a floating conversion rate. Its contracts will be open source, and audits will be published publicly. This is expected to enable other entities, including DeFi protocols, to make informed decisions with regard to adding support for the token.
With the latest initiative, Coinbase’s focus is to foster massive adoption of the token and expects to have several use cases post-Merge to trade, transfer, and use in DeFi applications. cbETH can be used by investors to exit their staked ETH for cash, transfer their staked ETH to another non-custodial wallet, and deposit cbETH into a protocol as collateral, according to the whitepaper.
cbETH is designed to function as a cToken or compound token to make it compatible with existing decentralized applications in the DeFi space. It is also important to note that ETH and cbETH are not pegged and hence, not interchangeable 1:1. As a matter of fact, it represents staked ETH in addition to all of its accrued staking interest starting from June 16 this year when Coinbase kicked off cbETH’s conversion rate and balance.
“Over time, the price of cbETH will likely deviate from ETH because cbETH represents 1 staked ETH plus all of its accrued staking interest starting from when cbETH’s conversion rate and balance were initialized. cbETH is minted exclusively by Coinbase. cbETH can be sold or sent off-platform, while ETH2 will remain locked-up until a future protocol upgrade.”
Coinbase revealed that once a sufficient supply of cbETH is established, trading for the pair, cbETH-USD, will be launched in phases. However, support for the asset could be restricted in some jurisdictions.
SEC Vs. Coinbase
The latest development emerges in the wake of the US Securities and Exchange Commission (SEC) initiating a fresh probe against Coinbase.
The watchdog subpoenaed the exchange and sought details on how it classifies and lists digital assets, its staking programs, stablecoins, and yield-generating products. Previously, the agency had filed a civil complaint against Coinbase, accusing it of listing nine securities as cryptocurrencies.
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.
Credit: Source link