Coinbase launches liquid staking token to ‘keep Ethereum decentralized’
According to an August 24 announcement, Coinbase has launched a liquidity token for users who have wagered Ethereum (ETH) on its platform called cbETH.
Coinbase adds support for Coinbase Wrapped Staked ETH (cbETH) on the Ethereum network (ERC-20 tokens). Please do not send this asset over any other network. Funds are lost.
What is cbETH? Let’s dive in 🧵👇 pic.twitter.com/n3Dp4OA6HO
— Coinbase Assets (@CoinbaseAssets) August 24, 2022
The exchange has revealed that Coinbase-wrapped staked ETH will become a “utility” ERC-20 token.
“Coinbase Wrapped Staked ETH (cbETH) is a utility token representing ETH2, which is ETH staked through Coinbase. While cbETH can be sold or sent off-platform, ETH2 will remain locked up until future protocol upgrades. will be.”
According to the announcement, only staking fees apply and there are no fees for wrapping and unwrapping tokens.
Coinbase continued that the price of cbEth does not track the value of ETH in a 1:1 ratio.
With the Ethereum merge just weeks away, interest in staking is on the rise. However, withdrawals of staked ETH will not take effect until the Shanghai update scheduled for 2023.
Battle with “Lido”
According to the Ethereum whitepaper, the Ethereum liquid staking market is dominated by “solutions looking to break through 33% network penetration,” referring to Lido (LDO).
Coinbase believes it can compete with this solution because it is a trusted brand within the community, which allows it to “keep Ethereum decentralized and secure.”
According to the dune analysis dataLido currently accounts for 31% of staked Ethereum, while Coinbase accounts for 14% of staked Ethereum.
Community has concerns about centralized staking providers
There are still concerns about what a centralized staking provider means for Ethereum’s move to a proof-of-stake network.
Several industry insiders have expressed concern that Ethereum is susceptible to censorship from these entities and could succumb to regulatory pressure.
However, Coinbase CEO Brian Armstrong said: Said We do not respond to requests from regulatory authorities to censor transactions. Instead, if there is no alternative, we will stop the staking service.
