Coinbase's liquid collateral token cbETH has been massively redeemed in the past month, causing the supply of cbETH to drop by more than 50%, with a value of approximately $2.4 billion. Although this supply drop has caused some market concerns, Coinbase said it was a conscious result of an infrastructure upgrade it conducted in June. This upgrade involves updating the volume of the total reserve pool to bring the cbETH supply closer to the market circulation while adapting to the market's liquidity needs.

Key Points

- The supply of Coinbase's liquid collateral token cbETH has dropped by more than 50% in a month, with a devaluation of approximately $2.4 billion.

- CbETH is a liquid collateral token representing Ethereum pledged on Coinbase.

- The supply drop is due to the infrastructure upgrade conducted by Coinbase in June, not a sudden market change.

- The supply adjustment after the upgrade makes the new total supply closer to the market circulation.

- CbETH is based on Ethereum staking, and the conversion is based on Coinbase's conversion ratio.

- CbETH can be used as collateral to borrow other assets or earn returns on cryptocurrency protocols.

- The supply adjustment is designed to balance market liquidity needs.