Coinbase Launches New Token, Will It Ease Sanctions Uncertainty

Nidhish Shanker
August 25, 2022
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
COIN Price: Coinbase Soars 415% YTD, Cathie Wood's Ark Invest Sells 15M Shares

Coinbase is allowing its users who stake Ethereum to receive a new utility token. The new token is an ERC-20 token, called Coinbase Wrapped Staked ETH. The new token is a liquid representation of staked ETH and can be used all across DeFi.

All the staked ETH is locked in Coinbase due to the upcoming Ethereum Merge. Once the merge is complete and all the technological and financial uncertainties are taken care of, the staked ETH can be unlocked. 

While the staked ETH is locked, the new token cbETH will give users the option to trade on their staked ETH. Moreover, the new cbETH token can also be traded off the Coinbase platform.

Advertisement
Advertisement

Coinbase Stake In Ethereum

Coinbase is one of the biggest holders of Ethereum. Kenneth Worthington, a wall street analyst at JP Morgan revealed that the company will be one of the biggest beneficiaries of the Ethereum merge. He estimates that the platform has about a 15% share in Ethereum assets.

Ran Neuner, a CNBC crypto trader, revealed that Coinbase will be one of the biggest Ethereum validators. However, he also envisions that this will be a major issue for Ethereum. The US Treasury’s sanction of Tornado Cash means that any centralized company verifying Tornado Cash transactions could also face OFAC’s ire. 

On the other hand, if the company refuses to validate Tornado transactions, it could be a huge censorship issue on Ethereum.

Advertisement
Advertisement

Preparation For The Merge

Coinbase will pause the withdrawal of ETH and ERC 20 tokens from Ethereum. While Coinbase expects the transformation of Ethereum from Proof-of-work to Proof-of-Stake to be seamless, it is taking a precautionary stance. 

Moreover, the company reveals that there will be no ETH2 tokens. It also cautions its users against sending their tokens to upgrade to ETH2 as there is no such token. 

It also revealed that the price of cbETH will deviate from staked ETH. This is because it will also include the accrued interest.

Advertisement
coingape google news coingape google news
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Nidhish is a technology enthusiast, whose aim is to find elegant technical solutions to solve some of society's biggest issues. He is a firm believer of decentralization and wants to work on the mainstream adoption of Blockchain.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.