ETH 2.0 Staking on Coinbase - Yay or Nay?
Yesterday we read about Coinbase launching a waiting list for customers who want to participate in ETH 2.0 staking.
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What is ETH 2.0 Staking? On December 1st, the Ethereum protocol switched from proof of work to proof of stake. That means it’s replacing mining with staking as the consensus mechanism to validate blocks of data. It allows ETH holders to lock it on the blockchain and earn rewards in exchange for validating blocks, so people can earn more ETH using the assets they already own and help the network at the same time. Another benefit of staking is that it makes Ethereum more sustainable, because it doesn’t consume as much energy as mining to achieve the same results – it can be done just with a laptop or smart phone.
Buterin's long term ETH roadmap, 19th Mar 20 (Image Source)
Late to the party? While the <a href=”https://twitter.com/coinbase/status/1361733385782259719”>announcement by Coinbase yesterday about the option for 2.0 staking rewards on Coinbase read quite sensational, it’s old news for other major exchanges.
Binance, Kraken, Huobi and OKEx, for example, all offered it without a waiting list in December soon after Beacon Chain was launched.
How much does it cost you to earn? Coinbase promises returns of <a href=https://www.coinbase.com/staking>up to 7.5% but this comes after it takes a 25% commission as mentioned in their <a href=https://www.coinbase.com/legal/user_agreement>user agreement.
What about other exchanges?
Kraken estimates the returns between 15% and 17% annually while charging <a href=”https://support.kraken.com/hc/en-us/articles/360053188871-Ethereum-ETH-staking-the-Ethereum-2-0-network-upgrade”>15% administrative fee.
Both <a href=”https://www.huobi.com/en-us/staking/eth2/”> Huobi’s and <a href=”https://www.okex.com/support/hc/en-us/articles/360053239952-OKEx-to-launch-Ethereum-2-0-staking-with-additional-benefits-and-rewards”>OKEx’s estimated returns range between 6% and 20% and they’re not mentioning fees on their websites.
Bottom Line With all this in mind, if you want to participate in ETH 2.0 staking, you can probably skip the waiting lists and go with a different exchange and get the same or possibly higher returns.
In any case, it's good to learn about rewards, risks and the requirements before locking your assets for a longer period of time. There’s plenty of information available directly on the <a href=”https://ethereum.org/en/eth2/staking/”>Ethereum website if you want to dive deep into the ETH 2.0 Staking.
What's your opinion about staking ETH 2.0? Do you think it's risky leaving your coins on an exchange? Are you ok with not being able to withdraw for a couple of years? Do you trust other DeFi protocols more than an exchange platform to keep your assets safe? I'd love to hear from my fellow Hive/LeoFinance community.
