Do You Deeply Believe In ETH? Then Buy It About 7% Cheaper - BETH

By SirK133 | CryptoCat | 14 May 2021


If the title sounds too good to be true, it probably is, but not as much as you might think - you will just have to wait for your ETH a bit. This is a pice about BETH - Binance token that is a representation of staked ETH. While it's not the latest thing you might want to give it a good look since ETH seems to have bright future ahead. If you bought some ETH early enough the recent gains give you some room to cover little risks involved. If that is the case you probably wish (I do) you had more ETH to hodl and this is the way to add to your stash of ETH without directly buying it. Since I'll be going through some ways you can make money on this instrument, the usual disclaimer comes early:

This is not a financial advice – I’m no financial adviser, nor is this a legal advice – although I’m a lawyer. This is no advice at all, seriously, don’t take advice from random cats – the Internet is full of them! DYOR!

With that out of the way, let me show you what I will try to cover:

1. What is BETH and how will I get my free 7% in ETH,
2. Can I earn more (YES!):
2.1. Staking rewards,
2.2. Trading,
3. Risk you take to do this.

1. What is BETH

BETH is token released by Binance exchange, in their own words:

BETH is a tokenized asset representing your staked ETH on a 1:1 basis. This token has two features:
  1. When ETH 2.0 goes live, users can swap BETH to ETH at a 1:1 ratio.
  2. Binance distributes BETH rewards to users' spot accounts daily according to users' BETH position.

The ETH staking referred to above is the ETH 2.0 staking. If you don't know what that is... well you might have quite some reading to do, but in most simple words: this is a locked staking process, that locks your ETH for the purpose of transition to proof-of-stake consensus mechanism in the future. 

Now technically you can stake your ETH through Binance and get BETH in 1:1 ratio, but it's not advised, since Binance lunched BETH/ETH trading. Currently you can buy 1 BETH for 0.93xx ETH, yesterday it was available for less than 0.93, and 19.04 some lucky bastard bought it at 0.8884. When ETH 2.0 goes live, you will be able to exchange 1 BETH to 1 ETH - no matter how much USD 1 ETH will be worth at the time, cashing in any discount you managed to get on BETH.

Now, I did mention in the title this is for someone who deeply believes in ETH and is willing to hodl through some serious FUD, since ETH 2.0 is not expected to happen this year. There is no set date and the ETH team is hardly making any predictions, but to give you some perspective I managed to find Ethereum Foundation’s Tim Beiko posting on Discord this:

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What makes me consider BETH is the convenience - to start staking in ETH 2.0 contract you need minimum of 32 ETH - by current prices that's no pocket change, but you can buy BETH for as little as you want, even with a few dollars. If you stake ETH you are expected to actually run a validator node and if you do this badly you might incur penalties (slashing). If you stake ETH it is locked till upgrade gets released, but with BETH you can get out most of yours investment whenever you wish. In theory (by Binance) you get the same staking reward directly to the spot account - it's in BETH so you compound the interest. If you think about it you actually get better returns, since your 1 BETH was cheaper then 1 ETH someone staked directly. That's a lot of convenience if you ask me.

And there seems to be no shortage of people believing staking ETH is a good idea:

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2. How to earn more

2.1. Staking

This is pretty straight forward- you will receive interest on all BTH you hold on Binance daily - how much depends on the volume of ETH locked in the contract (overall, not yours) so unfortunately the more people join in the less each one gets. Current rate is 7,3% APY, as I mentioned, distributed daily. What is important, if you stake BETH in any other way, for example with some Binance Earn option that was available not long ago, you will not receive rewards from ETH 2.0 staking.

2.1 Trading

If you are patient and engaged daytrader you can take advantage of quite stable ratio that BETH/ETH pair seems to keep. 

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As long as you minimize trading fees you might get a few opportunities daily to get 0.25-1% profit with quite visible levels of support and (by comparison) quite safe asset. Some traders like to play it safe and at the end of the day to be stuck with interest compounding version of "king of altcoins" that is down 2% than latest craze that just got rugpulled for -99%. BETH/ETH might also be a "more risky" alternative to very safe plays, for example stablecoins arbitrage. I don't say it's some kind of a gold mine, but you might give it a thought.

3. Risks

There is no such thing as a free lunch - some risks are involved. You need to hold BETH on Binance to get staking rewards. While Binance is considered one of the safest exchanges it's not immune to hacking and fell victim to some hacks in the past. Also if ETH 2.0 is a flop your BETH might suddenly lose significant value. In a daily timeframe BETH seems to be in a slow downtrend - while it currently phased into consolidation it might resume anytime, for example if BETH holders see a weak ETH price action and decide to jump ship altogether - it's a less volatile pair with quite stron buyback guarantee but when talking about months a lot can happen in crypto.  

For someone that is not all in on ETH but is pretty bullish on it in a long term (like me) BETH bought on a local deep seems like a convenient way to cash in some gains. Since ETH has been lately on the move I thought it would be nice to give you some information about options you have and maybe inspire some interesting ideas.

Mey your coins be like cats - eager to climb and unable to come down,
CryptoCat.

 
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SirK133
SirK133

Lawyer, analyst, crypto enthusiast, gamer, poet. I am interested in everything that makes up our world and how it is related.


CryptoCat
CryptoCat

My cat so often stomps the keyboard while I do my crypto research, I might as well make him a co-host here.

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