What is cbETH?

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cbETH, or Coinbase Wrapped Staked ETH, is an innovative ERC-20 token introduced by Coinbase to address key limitations during Ethereum’s transition from proof-of-work to proof-of-stake. As the long-anticipated Ethereum Merge reshapes the blockchain’s infrastructure, staked ETH becomes temporarily illiquid. cbETH solves this challenge by offering users a liquid, tradeable representation of their staked Ethereum—allowing continued participation in the crypto ecosystem without sacrificing future rewards.

This guide explores cbETH in depth: its purpose, functionality, integration within DeFi, and practical usage—all while maintaining alignment with Ethereum’s evolving network dynamics.

Understanding cbETH: A Liquid Token for Staked ETH

cbETH is a wrapped token issued by Coinbase that represents staked Ethereum (ETH2) on the platform. Each cbETH token corresponds to one staked ETH plus accumulated staking rewards over time. Unlike regular ETH, which remains locked during the post-Merge withdrawal period, cbETH provides liquidity by enabling users to trade, transfer, or use their staked assets across supported platforms.

As an ERC-20 token, cbETH inherits full compatibility with Ethereum-based wallets, exchanges, and decentralized applications. Its value starts at parity with ETH but gradually diverges as staking rewards accrue—meaning each cbETH token increases in underlying ETH value over time.

👉 Discover how liquid staking tokens are transforming Ethereum participation.

Why Was cbETH Created?

The Ethereum Merge introduced a critical limitation: staked ETH cannot be withdrawn immediately after the network transitioned to proof-of-stake. This lock-up period could last several months, effectively freezing user funds despite successful validation participation.

Coinbase developed cbETH to solve two core issues:

  1. Liquidity Preservation: Users who stake ETH through Coinbase receive ETH2 tokens, which are non-transferable until withdrawals are enabled. cbETH allows these holders to unlock liquidity by wrapping their staked ETH into a freely tradable asset.
  2. DeFi and Market Continuity: Without a liquid form of staked ETH, users would be excluded from trading, lending, or yield-generating opportunities during the Merge. cbETH ensures continued engagement with the broader Ethereum economy.

It's important to emphasize that cbETH is not free money—it’s a 1:1 representation of staked ETH plus rewards. Selling cbETH transfers ownership of those future ETH2 rights to another party.

How Does cbETH Work?

When you stake ETH via Coinbase, your funds are committed to the Ethereum 2.0 Beacon Chain as part of the network’s consensus mechanism. In return, you earn staking rewards—but cannot access your principal or rewards until withdrawal functionality is activated on Ethereum.

To enhance usability, Coinbase offers a conversion option:

While you can wrap ETH2 into cbETH at any time, unwrapping is currently irreversible—meaning you cannot convert cbETH back into ETH2 directly on Coinbase. However, users seeking direct exposure to ETH2 can sell cbETH for ETH and re-stake it.

How to Convert ETH2 to cbETH on Coinbase

Converting your staked ETH to cbETH is straightforward if you meet eligibility requirements:

  1. Be located in a jurisdiction where Coinbase supports ETH staking.
  2. Complete Coinbase’s Know Your Customer (KYC) verification process.

Once eligible:

  1. Log in to your Coinbase account.
  2. Go to the Assets section and select Ethereum 2 (ETH2).
  3. Click on Want to sell or send your ETH2?
  4. Enter the amount of ETH2 you wish to convert.
  5. Review the estimated cbETH output.
  6. Confirm by selecting Wrap now.
  7. After conversion, view your updated cbETH balance and exchange rate.
  8. Optionally, trade or transfer your cbETH immediately.

Note: Always verify current fees and exchange rates before executing trades.

👉 Learn how to maximize returns using liquid staking derivatives like cbETH.

Using cbETH in Decentralized Finance (DeFi)

One of cbETH’s most powerful features is its seamless integration into the DeFi ecosystem. As an ERC-20 token, it can be used across various protocols for:

By leveraging cbETH in DeFi, users maintain exposure to staking rewards while actively generating additional income through lending or liquidity pools. This dual-yield potential makes cbETH particularly attractive during extended lock-up periods.

Moreover, its growing acceptance across major DeFi platforms signals strong market confidence in its stability and redeemability post-withdrawals.

Can You Sell or Trade cbETH for Other Cryptocurrencies?

Yes—cbETH is fully tradeable on Coinbase and many external platforms. You can:

Although there's no direct “cbETH to Bitcoin” button, standard trading workflows allow conversion through intermediate steps (e.g., cbETH → USDC → BTC).

Always check:

Selling cbETH transfers all future redemption rights—including staking rewards—to the buyer. Therefore, consider holding if you anticipate long-term appreciation in ETH value post-withdrawals.

Frequently Asked Questions (FAQ)

Q: Is cbETH the same as ETH?
A: No. While cbETH starts at a 1:1 value with ETH, it represents staked ETH plus accrued rewards. Over time, its underlying ETH value increases, causing price divergence.

Q: Can I unwrap cbETH back into ETH2?
A: Not currently on Coinbase. Once converted, the process is one-way. However, you can sell cbETH and restake ETH to re-enter the staking queue.

Q: Does holding cbETH earn staking rewards?
A: Yes—rewards are automatically reflected in the increasing ETH-equivalent value of each cbETH token. No manual claiming is required.

Q: Is cbETH safe to use in DeFi?
A: Generally yes, but always assess smart contract risks and platform audits before depositing. Also remember that price volatility and impermanent loss may affect returns.

Q: Will cbETH be redeemable for ETH after withdrawals launch?
A: Coinbase has stated that cbETH will remain redeemable for staked ETH (plus rewards) once Ethereum enables withdrawals—a key design feature ensuring long-term utility.

Q: How does cbETH differ from other liquid staking tokens like Lido’s stETH?
A: Both offer liquidity for staked ETH, but cbETH is issued exclusively by Coinbase and tied to its custodial staking service, whereas stETH operates through a decentralized protocol.

Final Thoughts

cbETH represents a strategic innovation in response to Ethereum’s structural shift. By transforming illiquid staked ETH into a flexible, ERC-20-compliant asset, Coinbase empowers users to retain financial agility during one of the blockchain’s most transformative upgrades.

Whether you're trading, investing in DeFi, or managing portfolio diversification, cbETH offers a compelling bridge between staking commitments and real-world liquidity needs.

As Ethereum continues evolving, tokens like cbETH will play a vital role in shaping a more accessible, efficient, and user-centric decentralized economy.

👉 Explore advanced tools for managing liquid staking assets like cbETH.