Surely you are already familiar with Coinbase, but most likely you have never heard of staking on the platform. However, the company recently issued a press release stating that it will be possible to join the waiting list for Ethereum 2.0 staking, news that has already captured the interest of millions of users.
But let's try to understand together what staking is and what are its advantages.
Staking in pills
If you are used to hanging out inside exchanges like Binance or platforms that allow you to earn interest on digital coins, you have surely heard of staking. Well, if we want to put it in simple terms, staking could be compared to mining, with the only difference being that it requires a smaller amount of resources.
Specifically, if with the mining process you help to confirm the blocks of transactions, with staking you support the security of operations. The reasoning is almost the same: as far as mining is concerned, we reason by Proof of Work (PoW), that is the ''competition'' among miners to confirm a block. Whoever has more computing power "wins" the challenge, winning the reward of a given block.
For staking, instead, we reason by Proof of Stake (PoS). All participants keep their coins inside a wallet and, based on the amount held, the protocol will randomly assign a block. It is important to note that, in most cases, staking services ask the user to block assets for a specific period of time that can be 3, 7, 15, 30, 60, or 90 days.
Unlike mining, this process obviously has lower costs and is much easier to scale. This is just one of the many reasons why Ethereum decided to move from PoW to PoS by creating ETH 2.0.
ETH staking on Coinbase
While, on average, it takes 32 ETH to start a node on Ethereum's new blockchain, Coinbase has decided to provide its users with free access, regardless of the amount of ETH they want to stage. This is already a good starting point, as even those who don't hold a large number of coins can participate by improving the security of the network and, most importantly, earning interest on their funds.
According to what Rhea Kaw, Coinbase's product manager, said, the estimated annual interest on ETH staking is around 7.5% APR, where APR stands for Annual Percentage Rate. This figure, of course, is established based on the last 90 days of network performance and may vary slightly during the staking period.
Does staking on Coinbase have any costs?
Depending on which point of view you take into consideration, staking on Coinbase has no costs, meaning that the user doesn't have to pay any additional money to use the service. The only thing you need to have are coins like Ethereum, Algorand, Cosmos, or Tezos. Once locked, the user starts receiving their staking rewards on a daily or weekly basis based on the asset held.
However, Coinbase will retain a 25% commission on the earnings earned, which it will use to keep the service efficient. Putting your coins in staking independently, in fact, is an operation that turns out to be very expensive and, above all, not very accessible to the average user.
How do I access the service?
As for accessing the service, however, you just need to be a verified user and live in a country where cryptocurrency staking is allowed. Once you've joined the waiting list, you'll just have to wait for the official release from Coinbase.
According to Rhea Kaw, "Upgrading the current Ethereum network to ETH2 is a significant and complex effort that will improve the speed, efficiency and scalability of the network. The multi-year investment by the Ethereum community will reduce congestion, lower fees, and consume fewer resources, particularly electricity."
Conclusions
If staking was already a fairly accessible form of earning via platforms like Binance and Trustwallet, the arrival of ETH staking on Coinbase will make it even easier.
The company, in fact, is known for providing extremely intuitive services that can be used even by those unfamiliar with these tools.
As in all activities related to the world of cryptocurrencies, staking can hide some risks that, however, when compared to trading or arbitrage operations, are very small.
In any case, the advice is to keep yourself updated.
*This article will be posted on theledger.it following our schedule in Italian language. Just check the website if you want to support my work :)
Learn More
- https://theledger.it/recensioni/coinbase-recensione-dellexchange-di-cryptovalute/
- https://theledger.it/recensioni/binance-lexchange-di-criptovalute-perfetto-per-i-traders/
- https://theledger.it/news/tecnologia/il-contratto-da-524288-eth/
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