Tag: staking

Binance US Launches High-Yield Ether Staking Service Ahead of Ethereum’s ‘Merge’ Event

Binance US, a US-based subsidiary of the world’s largest cryptocurrency exchange, is now offering Ethereum staking with an annual percentage yield (APY) of 6 percent — a figure which is a sizable step above major competitors like Lido and Coinbase which offer 3.5 percent and 3.25 percent APY, respectively. In an announcement, Binance US said that users would be able to stake ETH through the platform at a competitively low minimum of 0.001 ETH. In order to stake ETH directly through the Ethereum network, a user would otherwise have to put up a minimum of 32 ETH.

“As the Ethereum network continues to transition towards The Merge, we are thrilled to now offer ETH staking with some of the highest APY rewards in the industry,” Binance US CEO Brian Shroder said in a press release.

Data from StakingRewards shows that the number of users staking ETH rose over figures from last month to 54,800. However, the average revenue from ETH staking was down from a high of $1.68 billion (roughly Rs. 13,400 crore) on August 13 to $937 million (roughly Rs. 7,500 crore) at the time of writing. The decrease was largely due to ETH’s decline in price from over $2,000 (roughly Rs. 1,60,000) in mid-August.

The “Merge” refers to Ethereum’s long-awaited upgrade that will combine the network’s consensus layer, known as the beacon chain, with its execution layer, which is the current Ethereum mainnet. The Merge will complete Ethereum’s transition from a proof-of-work consensus mechanism to proof of stake.

The Merge is currently expected to take place sometime between September 13 and 15. After that time, Ethereum users will be able to stake their ETH to help secure the network while earning passive ETH rewards in the process.

Users will be allowed to withdraw their staked ETH from the Ethereum network after another upgrade referred to as the “Shanghai Upgrade” which depends on the successful completion of the Merge upgrade.

Nevertheless, because of the complexity of the upcoming Merge upgrade, there is no guarantee of a smooth transition and users’ funds are subject to risks such as protracted return on the invested funds or loss of the funds in case the upgrade fails.

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Coinbase Prime Now Allows Institutional Investors to Stake Ether Among Other Options

Institutional clients of Coinbase Prime based in the US will now be able to stake ETH on the platform, with funds secured in the firm’s cold storage vault. Staking allows investors to earn a yield on their cryptocurrencies by committing them to a pool of assets, which helps support the liquidity and operations of a blockchain ecosystem. The offering allows another avenue for financial institutions who wish to enter the crypto space but are unsure of how to do it.

Aaron Schnarch, Vice President of Product, Custody, stated in a blog post, “We’re launching Ethereum staking to US domestic institutional clients on Coinbase Prime. Using our industry-leading cold storage, clients can now generate yield by staking ETH.”

Coinbase Prime aims to provide an end-to-end staking experience to its clients. They can create a wallet and make decisions on how much they want to stake. Also, they can initiate staking from the ETH asset page from their Coinbase prime account.

In order to secure users’ staked ETH and yield, Coinbase Prime will lock withdrawal keys in their cold storage custody vault during the entire staking process.

Furthermore, the transactions will first go through a consensus, and only then and then it will be executed. The reason behind this is to provide an additional layer of security to client accounts.

That said, the practice isn’t without risks. Staking often requires investors to store their funds with a third party known as a “custodian,” who, in some cases, technically owns the funds while they are being staked. Earlier this year, investors saw billions wiped away as custodians like Voyager and Celsius went bankrupt in response to the collapse of TerraUSD.

At present, Ethereum is transitioning from a proof-of-work to a proof-of-stake blockchain system, meaning that both validation processes are running concurrently. Known as “The Merge”, the transition is expected to happen in September, at which point Ethereum mining will be phased out.

Coinbase Prime also allows staking for cryptocurrencies such as Solana, Polkadot, Cosmos, Tezos, Celo, and others.

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