Cryptocurrency Exchange Coinbase has started a waiting list for users who want to earn interest on Ether (ETH) saved in their account wallet. According to a recent blog post, the company will soon introduce a staking facility that will allow clients to set aside a portion of their property to funnel into the new Ethereum network, where it will be used to keep the system well-oiled. and sure. The exchange claims that participants could earn up to 7,5% interest on the stake amount, but will not be able to sell or trade the allocated Ether at this time. However, there will be no minimum bets, so users can pledge as much as they want. The upcoming Ethereum 2.0 staking service will build on similar facilities introduced in 2019 that allow Coinbase users to earn rewards for their Tezos and Cosmos holdings.
Deploying Ethereum 2.0 with Coinbase
For anyone new to cryptocurrency, it can be a bit confusing that Coinbase chooses to offer staking services for Ether but not for Bitcoin, the world's largest cryptocurrency. The reason lies in the fundamental differences in how the two underlying blockchain systems work. The Ethereum network recently began a transition that will review its consensus mechanism, which is designed to encourage network maintenance and ensure that data cannot be tampered with. With Ethereum 2.0, the network will transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus, which is generally considered a more efficient and energy-efficient way of maintaining the network. A basic way of describing the difference is that in a PoW (used for Bitcoin) system, one unit of computing power equals one unit of mining power. However, under PoS, one unit of value at stake guarantees one unit of mining power. According to data from Dune Analytics, more than three million ETH (worth approximately €5.4 billion at current market rates) have been committed to date under the Ethereum 2.0 escrow agreement. Typically, Ethereum 2.0 players need to commit a minimum of 32 ETH (nearly €60,000), which saves many people the hassle of competing. But Coinbase will allow its clients to contribute as little ETH as they want, in exchange for a 25% commission on the rewards earned. The main caveat is that if the price of Ether falls, users will not be able to limit their losses by selling their shares. For many individual investors, participation in Ethereum 2.0 is actually a long-term bet on the future of the project and an increase in the value of the underlying coin. Staking via Coinbase also means that Ether holders will not be able to transfer their funds to a non-custodial wallet, which they have full control over, as opposed to the custodial wallet provided by the exchange itself.