US-based crypto exchange Coinbase has launched a DeFi-compatible service token called Coinbase Wrapped Stake ETH (cbETH), which can be traded outside of its platform. Coinbase shared the following statements:

   "Coinbase will add support for Coinbase Wrapped Staked ETH (cbETH) on the Ethereum network (ERC-20 token). Do not send this asset over other networks or your funds will be lost."

"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."

coinbase partnership

In the statement made by the exchange, it announced that the cbETH token will be distributed to investors who stake ETH. The most important feature of the token issued by Coinbase is that investors will be able to trade with cbETH tokens, while currently locked ETHs cannot be used.

Introduced before the Ethereum Merge update, which will take place next month, the token is touted as an advantageous product by highlighting some of the disadvantages of staked ETHs.

cbeth

In the statement made, it was stated that the uncertainty and lack of liquidity in the market reduced the desire to stake ETH, while it was emphasized that this situation had a negative effect on network security. It was also stated that the staked ETHs were said to be idle, which made it a more useful crypto asset.

Coinbase mentions several use cases for maintaining staked ETH positions for the cbETH token, which it proposes as a solution to such problems, using it as collateral in the DeFi industry, transfer of staked ETH.

In the technical document published for cbETH, it is stated that ETH and cbETH are not fixed, but are expected to be interchangeable. As the amount of rewards from staked ETH based on the document increases, cbETH is expected to represent more staked ETH. This may cause differences in asset prices over time.