• These liquid staking tokens are not intended to maintain a 1:1 peg with ETH.
  • The importance of cbETH’s discount may be better appreciated when compared to rETH.

Wrapped Ethereum staking token (cbETH), released by Coinbase at the end of last month, has been selling at a discount ever since. Today, the discount reached as high as 8% in comparison to Ethereum, the cryptocurrency it is intended to represent. The fact that another staking coin, Lido Staked ETH (stETH), is also selling at a discount (although a lesser one, at 3%) is encouraging.

These liquid staking tokens are not intended to maintain a 1:1 peg with ETH, despite the name that suggests otherwise. Therefore, the loss of this peg does not have the same consequence as the loss of a stablecoins peg.

Coinbase Has Issued 677,308 cbETH

For the week ending on Friday, the two biggest Ethereum staking companies were Lido ($4.2 billion) and Coinbase ($2 billion). However, experts have noted that the two liquid staking tokens have distinct reward schemes, and the various discounts suggest that, for the time being, people favor Coinbase’s rivals.

According to Etherscan, as of this writing, Coinbase has issued 677,308 cbETH, which represents slightly more than $1 billion in staked ETH. The additional $1 billion is the result of Coinbase’s illiquid ETH staking feature.

In a note published on Friday, Galaxy Digital’s head of company-wide research, Alex Thorn, said that the importance of cbETH’s discount may be better appreciated when compared to rETH, or Rocket Pool ETH.

Both are based on the cToken paradigm, therefore the value of the tokens does not grow as incentives are earned. As an alternative, they may be redeemed for a decreasing proportion of staked ETH plus incentives, less any costs and penalties incurred by the issuer. Therefore, in theory, the longer it is kept, the larger the value at which it may be redeemed.

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