Coinbase Liquid Staking

Staking

Coinbase's liquid staking product provides investors access to on-chain yield with the ease and simplicity of remaining inside the Coinbase ecosystem.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Coinbase liquid staking abstracts away the challenges and risks around maintaining staking infrastructure by allowing users to delegate their Proof-of-Stake (PoS) assets to professional node operators.
What we like less
Staking with Coinbase assumes greater censorship risks as it is maintained by a centralized entity with ability to blacklist token addresses.
What it means for you
Offers a simple way for you to generate yield on your long-term PoS assets without the opportunity cost of staking, all while remaining inside the Coinbase ecosystem.
Information
Exploit/Hacks
Unknown
Info
Key Metrics
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by at least one experienced auditor; OpenZeppelin audited in August 2022
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 1% by total value locked reduces risk
  • Core contracts can be upgraded with just an EOA wallet
  • At least one critical governance issue documented
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No death spiral concerns
  • This protocol is susceptible to risks related to staking a token to secure a network, such as slashing events
Things to know about Coinbase Liquid Staking

How Coinbase Liquid Staking works

Coinbase's liquid staking service allows users to earn staking rewards without locking assets or maintaining staking infrastructure. Users deposit their PoS assets into Coinbase's smart contracts and receive cTokens (i.e. cbETH) which represent ownership of the underlying staked assets plus any rewards accrued, minus any penalties such as slashing. The conversion rate between the cToken and the underlying assets thus changes as rewards accrue and penalties are incurred. Users can withdraw or redeem their stTokens back for their original PoS assets at any time, but must wait the duration of the unbonding period respective to each PoS chain. For ETH staking, redemptions are not possible until Phase 2 of ETH 2.0 merge and withdrawals are enabled on the beacon chain; until then, cbETH can be transferred or traded on exchanges. Following the merge, Coinbase will re-stake transaction fee rewards and any other sources of validator revenue to compound ETH staking rewards.

How Coinbase Liquid Staking makes money

Coinbase generates revenue by charging a fee on the staking rewards earned by depositors. There are no fees associated with wrapping or unwrapping cTokens.

How you make money on Coinbase Liquid Staking

Passive holders of PoS assets like ETH can generate additional yield on top of their holdings by participating in the PoS validation mechanism to earn block rewards. The unlocked liquidity with cTokens can also be redeployed within a number of popular DeFi protocols to generate additional yield on top of the staking rewards.

Coinbase Liquid Staking Pools
Coinbase ETH Staking
2.7%
Yield
$672M
TVL
Risk
B
Chain
Ethereum