The Bankless Guide to Coinbase cbETH

Updated: Nov 2023
Nov 9, 20233 min read

Coinbase Wrapped Staked ETH, also known as cbETH, is a new way for Ethereum holders to participate in validating the Ethereum network. By holding cbETH, you can earn ETH staking rewards while maintaining a liquid position and contributing to the security and success of Ethereum.

What is Coinbase cbETH?

Coinbase Wrapped Staked ETH, or cbETH, is an ERC-20 utility token that represents staked Ethereum (ETH) on the Coinbase platform. When users stake their ETH on Coinbase, they receive cbETH as a liquid representation of their staked ETH.

This approach allows users to maintain liquidity while participating in Ethereum's proof-of-stake consensus mechanism. In other words, instead of having their ETH locked up in the staking process, users receive cbETH tokens that they can freely trade, sell, or use in other DeFi protocols.

Here, keep in mind that the value of cbETH is tied to the value of the staked ETH, and it also accrues staking rewards over time, meaning holding cbETH is essentially equivalent to staking ETH but with the added benefit of liquidity. For more information on the current price and market data of cbETH, you can visit the Coinbase cbETH price page.

As for the size of cbETH, today there are over 191,974 staked ETH and thus $408 million in total value locked underpinning the token, making it one of the largest liquid staking project in all of crypto right now. You can check the ETH Liquid Staking dashboard on DeFiLlama to track cbETH’s growth compared to competitors. 

How to get cbETH

There are two primary ways to acquire cbETH: wrapping your staked ETH or buying cbETH directly from Coinbase.

Wrapping Staked ETH for cbETH

If you are already staking ETH on Coinbase, you can choose to wrap your staked ETH to get cbETH. The steps are as follows:

  1. 🔑 Log into your Coinbase account
  2. 🪙 Select “Ethereum” from your assets and then press “Earning Balance,” at which point you can “See options” including “Wrap or unwrap”
  3. 🔄 Select “Continue” and then enter the amount you’d like to wrap
  4. 🔍 Press “Preview” and ensure the transaction details are correct
  5. ✅ Finish by pressing “Accept and wrap now”

Buying cbETH from Coinbase

If you prefer to buy cbETH directly, you can do so on Coinbase. To do so, you would:

  1. 🔑 Log into your Coinbase account.
  2. 📝 Search for cbETH in the list of tradable crypto or head to the cbETH swap page
  3. 💱 Choose the amount you want to buy and confirm the purchase

Risks of cbETH

Engaging with cbETH, like any DeFi project, carries its own unique set of potential risks. It's crucial to understand these possible risks before deciding to use cbETH:

  • 🔪 Slashing Risk: If the Ethereum network experiences issues or if Coinbase, as your validator, fails to perform its duties correctly, some or all of your staked ETH could be slashed (lost).
  • 📉 Market Risk: The value of cbETH can fluctuate. If the value of cbETH falls or depegs, you could lose money.

Additional cbETH resources

To learn more about cbETH, consider exploring the following resources:

  1. 📚 cbETH whitepaper
  2. Coinbase cbETH FAQ
  3. 🦙 DeFiLlama cbETH dashboard

Zooming out

As one of the largest and most reputable cryptocurrency exchanges globally, Coinbase's entry into the Ethereum staking space with cbETH is a testament to the growing importance and potential of Ethereum's shift to a proof-of-stake consensus mechanism. Additionally, cbETH has quickly become one of the most popular liquid staking tokens in the cryptoeconomy, and this rapid growth is a clear indication of the confidence users have in Coinbase's ability to effectively manage their staked assets. Given Coinbase's significant clout and experience in the crypto industry, cbETH is well-positioned to remain a leading choice for Ethereum staking for years to come.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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