Over $2.4 billion worth of Coinbase cbETH tokens were withdrawn last month. The supply of cbETH has dropped by more than 50% due to massive withdrawals. CbETH is Coinbase's liquid-staked ether token.
Coinbase's liquid-staking token is cbETH lost More than half of its supply since June.
During that period, the cbETH market size declined to a value of $2.4 billion, leading to concerns from some market participants.
However, Coinbase says there is no cause for panic as the supply drop comes from an infrastructure upgrade. Implemented In June.
“We have updated the total reserve pool volume to streamline our infrastructure,” a Coinbase spokesperson said. News. “The decrease in cbETH supply is an intentional result of these updates.”
Stocking
CbETH is a liquid-staking token that represents Ether on Coinbase.
Staking is the locking of a token in a DeFi protocol or blockchain network that renders the token worthless until it is unlocked.
Liquid staking allows investors to hold locked assets that can be used in the form of a liquid-staked token issued via the blockchain or DeFi protocol instead of the underlying stake asset.
DeFi users can deploy liquid-staked tokens as collateral to borrow against other assets or earn a yield on crypto protocols.
Join the community to get our latest articles and updates
The DeFi market also has another extension of the staking meta – staking, through which investors can reclaim their liquid-staked tokens.
As a liquid-staking token, cbETH is backed by Ether tokens from investors on Coinbase.
Despite this support, the implied value of cbETH is not equal to the spot price of Ether.
Instead, Coinbase uses an exchange rate that governs the issuance and redemption of cbETH.
Issuing in this case is when an investor receives cbETH in exchange for Ether on Coinbase, redemption is the reverse – the user redeems cbETH and withdraws their Ether stake.
In June, Coinbase changed Unlike the previous arrangement that represented the total cbETH, its exchange rate calculation to index the staked ether backing for each cbETH.
As such, Coinbase felt it necessary to adjust the token supply.
“The new total supply figure is now closer to the circulating supply, in line with market liquidity requirements,” a Coinbase spokesperson said.
Osato Awan-Nomayo Our Nigeria based DeFi representative. He covers DeFi and technology. To share tips or information about articles, please contact him here [email protected].
Related TopicsCoinbaseCoinbase Wrapped StakedEthStaking