But what is cbETH, and how does it work?
What Is cbETH?
cbETH refers to Coinbase Wrapped Staked ETH (“cbETH”).
ETH2 is ETH staked through the Coinbase platform.
cbETH, therefore, represents staked ETH on Coinbase, which will eventually become ETH2 when the Merge completes.
Why Was cbETH Created?
Image Credit:Coinbase
The Ethereum blockchain isexpected to undergo its Mergein September 2022.
PoS is the same algorithm used by themore energy-efficient, affordable, and faster Solana.
cbETH was created for two reasons, both relating to locked Ethereum during the Merge.
Image Credit:Coinbase
The wrapped cbETH isn’t free cryptoit’s a promise of receiving something in the future.
In other words, validators must acquire wrapped cryptos to verify trades on the Beacon Chain.
How Will cbETH Impact the Ethereum Merge?
Image Credit:Coinbase
cbETH should have at least three impacts on the Ethereum Merge.
ETH and cbETH are not pegged or expected to be interchangeable 1:1.
In other words, although risks are involved, the price of cbETH may eventually be higher than ETH.
Our hope is that cbETH will achieve robust adoption for trade, transfer, and use in DeFi applications.
Coinbase may attract more users to stake Ether by issuing its own staking version of ETH.
cbETH is Coinbase’s solution and should help it stay relevant to its users during the merge period.
