What is cbETH?

Summary: cbETH, or Coinbase Wrapped Staked ETH, launched on June 16, 2022, is a utility token representing staked Ethereum (ETH2) on Coinbase. It enables secure and fee-free staking of ETH, providing liquidity and compatibility with various DeFi platforms. 

Users can earn a 3.3% APY on Coinbase and additional yields through different DeFi protocols. The cbETH to ETH ratio represents the conversion rate, growing with staking rewards. Backed by Coinbase's robust security measures, cbETH offers a user-friendly way to maximize staking rewards and is considered a safe and transformative utility token in the crypto ecosystem.

What is cbETH on Coinbase?

cbETH, or Coinbase Wrapped Staked ETH, is a utility token representing Ethereum 2 (ETH2), specifically ETH staked via Coinbase. Launched on June 16, 2022, cbETH facilitates secure and easy staking of ETH, unlocking DeFi benefits and liquidity. Users can wrap staked ETH to cbETH without fees, trade it on Coinbase, and use it in decentralized exchanges like Uniswap and Curve. It's designed for seamless compatibility with DeFi applications and offers rewards on staked ETH without lockups.

The wrapping staked ETH to get cbETH enables users to sell or send staked ETH before a future Ethereum upgrade. cbETH, an ERC-20 token, represents 1 staked ETH plus accrued staking rewards. Coinbase ensures top-tier security, working with trusted validators. Users can unwrap cbETH to receive underlying ETH2, with a conversion rate that grows over time, barring rare slashing events. The official cbETH contract address is viewable on the Etherscan onchain analytics platform.

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What are cbETH Yields (APY)?

Coinbase offers a 3.3% Annual Percentage Yield (APY) on Coinbase Wrapped Staked ETH (cbETH), allowing users to earn rewards on their staked Ethereum (ETH). In addition to this fixed return, users can further enhance their earnings by participating in various DeFi protocols that support cbETH.

Here are some examples of recent 30-day yield averages for cbETH across different DeFi platforms:

• Alien Base (CBETH-WETH Pool): 91.45% APY
• Sommelier (WETH-STETH-CBETH-RETH Pool): 32.65% APY
• Uniswap V3 (CBETH-WETH Pool): 20.21% APY
• Baseswap (CBETH-WETH Pool): 28.46% APY
• Pancakeswap AMM V3 (CBETH-WETH Pool): 82.12% APY

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These yields are in addition to the 3.8% APY offered by Coinbase, and users can explore opportunities to earn additional yield on platforms like Convex and Aura Finance, which also support cbETH. It's essential to recognize that participating in DeFi protocols involves various risks, and the yields can fluctuate based on market dynamics. For more details on platforms, visit Defillama.

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cbETH to ETH Ratio

The cbETH to ETH ratio represents the conversion rate between Coinbase Wrapped Staked ETH (cbETH) and Ethereum (ETH). This ratio is determined by the underlying value of 1 staked ETH plus all of its accrued staking rewards since the initialization of cbETH's conversion rate and balance. Over time, the price of cbETH will be higher than ETH due to these staking rewards.

The conversion rate will grow as long as staking rewards exceed any penalties from rare slashing events. It allows users to wrap and unwrap their staked ETH to cbETH, providing liquidity and enabling trading on various platforms.

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Is cbETH Safe?

Yes, cbETH (Coinbase Wrapped Staked ETH) is considered safe, as it is backed and managed by Coinbase, one of the most reputable and publicly listed cryptocurrency exchanges. Coinbase employs best-in-class encryption and security practices, working with highly rated validators and diversifying node operators, clients, and hosting to reduce slashing risk. The platform has a track record of keeping user funds secure for over 10 years. 

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Bottom Line

In conclusion, cbETH, or Coinbase Wrapped Staked ETH, is a transformative utility token representing staked Ethereum (ETH2) on Coinbase. Launched in June 2022, it provides a secure and user-friendly way to stake ETH, offering liquidity and compatibility with various DeFi platforms. 

With a 3.3% APY on Coinbase and additional yield opportunities across different DeFi protocols, cbETH presents an attractive option for users looking to maximize their staking rewards. The token's safety is ensured by Coinbase's robust security measures and a decade-long track record of trustworthiness.