Coinbase cryptocurrency exchange is preparing for the Ethereum Merge by launching its new Liquid Staking Token, called Coinbase Wrapped Staked ETH (cbETH) which will have several uses.
Coinbase and the launch of its Wrapped Staked ETH (cbETH)
In a roundup of tweets, Coinbase announced the launch of its new Coinbase Wrapped Staked ETH (cbETH), an ERC20 token representing ETHs staked on Coinbase.
Coinbase Wrapped Staked ETH (cbETH) is a utility token that represents ETH2, which is ETH staked through Coinbase. cbETH can be sold or sent off-platform, while ETH2 will remain locked-up until a future protocol upgrade.
Learn how cbETH works here: https://t.co/jtGdQelSI9
— Coinbase Assets (@CoinbaseAssets) August 24, 2022
“Coinbase will add support for Coinbase Wrapped Staked ETH (cbETH) on the Ethereum network (ERC-20 token). Do not send this asset to other networks or your funds will be lost.
What is cbETH? Let’s look at how it works
Coinbase Wrapped Staked ETH (cbETH) is a utility token that represents ETH2, or ETH being staked through Coinbase. cbETH can be sold or sent off the platform, while ETH2 will remain locked until a future protocol update.”
The new cbETH was created specifically by Coinbase to anticipate what Ethereum will be after its Merge update, scheduled for Sept. 6. To incentivize the purchase and use of cbETH, Coinbase allows investors to generate an additional return over standard rewards for staking or locking coins in a network.
Coinbase prepares for the Ethereum merge with cbETH
Continuing with its tweets, Coinbase points out that the price of cbETH is not pegged to ETH 1:1, but that it only represents ETHs put into staking plus all accrued staking interest from when the conversion rate and balance of cbETH were initialized.
Not only that, to avoid confusion, Coinbase also shows the Ethereum ERC-20 contract address for cbETH in 0xbe989595146f7af43049ca1c1ae358b0541ea49704.
Trading of cbETH starts today from 9 am if liquidity conditions are met and in regions where trading is supported, while the cbETH-USD pair will be launched in later stages.
Overall, Coinbase hopes to achieve massive adoption of its token, to which it attributes various uses for trading, but also for transfer and use in DeFi applications, soon after the Merge.
JP Morgan’s predictions on the benefits of the Ethereum Merge for the cryptocurrency exchange
Last week, JP Morgan analyst Kennet Worthington said in a letter to clients that Coinbase would benefit from the Ethereum Merge update.
And in fact, the analyst’s forecast is for Coinbase to collect more than $650 million in annual revenue from staking, assuming ETH remains at $2,000 and with an average return of 5%.
This is a way for the cryptocurrency exchange to rebound from its decline in the first part of 2022, which made it the worst performer compared to other exchanges.