The users of Coinbase will now be able to move their staked ETH in the form of a liquid-wrapped token—cbETH. Before the Ethereum merge, Coinbase said that it would release its own wrapped token on Wednesday.
The cbETH token will represent ETH2 directly and indirectly stake ETH with Coinbase, a cryptocurrency exchange platform. Until there is an upgrade in the version of Ethereum, ETH2 will remain locked. Crypto experts, on the other hand, say that Ethereum’s software will get a new update as soon as 2023.
However, since cbETH will be available in a liquid format for Coinbase users, they can use their staked ETH to exchange or send the asset to the location of their choice. Based on the changes made by Coinbase, users of the platform can withdraw the Ethereum they have staked or even use it as a gift or collateral on the DeFi network.
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.
What is cbETH? Let’s dive in 🧵👇 pic.twitter.com/n3Dp4OA6HO
— Coinbase Assets (@CoinbaseAssets) August 24, 2022
Coinbase introduces the “utility token”
When Coinbase announced the introduction of cbETH, it stated that the cryptocurrency could be used as a utility token, a term often used and understood by crypto investors. Utility tokens can be distinguished from regulations on security and payment tokens.
However, Coinbase has warned the investors of cbETH to transact their staked ETH across Ethereum’s network only. If the investors tried to operate this through any other means, all of their money might have gotten lost.
Also, no additional fees will be charged for wrapping and unwrapping the token introduced by Coinbase. However, there will be a minimal staking fee imposed on the transaction.