Aave cbETH Lending - Coinbase Staked ETH on Ethereum

What is Aave Ethereum cbETH?

Aave Ethereum cbETH is a lending market for Coinbase's wrapped staked ETH on Aave V3. cbETH represents ETH staked through Coinbase's institutional staking infrastructure, combining the security of a regulated custodian with liquid staking benefits. Supplying cbETH to Aave adds a second yield layer, though the additional return is typically minimal.

How This Market Works

When you supply cbETH to Aave V3:

Deposit cbETH into the lending pool
Receive aETHcbETH tokens representing your position
Continue earning Coinbase staking rewards (built into cbETH appreciation)
Earn additional interest from cbETH borrowers (typically minimal)
Withdraw cbETH plus any additional yield

Yield Composition: cbETH appreciates against ETH as staking rewards accrue. Aave supply yield adds a small component, but cbETH is mainly used as collateral rather than borrowed.

What Assets Are Involved

Supply Asset: cbETH (Coinbase Wrapped Staked ETH) Receipt Token: aETHcbETH - Aave deposit token Underlying: ETH staked through Coinbase validators Issuer: Coinbase

cbETH characteristics:

Institutional-grade custody by Coinbase
Regulated US entity backing
Appreciation model (not rebasing)
Growing DeFi integrations

cbETH vs Other Liquid Staking Tokens

cbETH (Coinbase):

Centralized but regulated custody
Institutional compliance focus
Coinbase ecosystem integration
US regulatory framework

stETH (Lido):

Decentralized validator set
Rebasing model
Largest LST by market cap
Extensive DeFi integrations

E-Mode for Correlated Assets

Aave V3's E-Mode enables:

Higher LTV for cbETH/ETH pairs (correlated assets)
Capital-efficient leverage strategies
Recursive borrowing for yield amplification
Up to ~93% LTV in ETH-correlated mode

Risk Disclosures

Smart Contract Risk: Exposure to Aave V3 and Coinbase cbETH contracts. Centralized Custody Risk: cbETH depends on Coinbase's staking infrastructure and custody operations. Regulatory Risk: As a US-regulated entity, Coinbase faces evolving regulatory requirements that could affect cbETH. Liquid Staking Risk: Validator slashing could theoretically reduce the cbETH/ETH ratio. Oracle Risk: Accurate cbETH/ETH pricing is essential for proper collateral valuation. Utilization Risk: Very low borrowing demand for cbETH means minimal additional yield. Opportunity Cost: Compare Aave yields to other cbETH deployment options. Withdrawal Risk: Converting cbETH back to ETH may face delays through Coinbase.

Aave Ethereum cbETH