Coinbase and Binance plan to enable staking on Ethereum’s just-launched Beacon chain, and trading of their own ETH2 wrappers. The move is a sign that becoming an Ethereum validator is increasingly easy, and that soon many such tokenized versions of staked ETH will start circling the crypto market.
“Coinbase customers will be able to convert ETH in their Coinbase accounts to ETH2 and earn staking rewards,” according to yesterday’s blog post.
Coinbase is one of many centralized exchanges likely to support Eth2 staking, granting users annualized ETH rewards in exchange for locking their tokens for at least the first phase of upgrade, expected to last between 6-12 months. Coinbase will also enable trading of a derivative of ETH locked in ETH2, providing liquidity for those locking up their ether ––this token would be similar to an IOU representing staked ETH.
The same strategy was also announced by Binance, today posting that they will support ETH2 staking through a native wrapper called “BETH”. The leading international exchange is also offering BNB incentives to those who staked through Binance.
Going forward, there will likely be ETH plus many versions of derivatives of staked ETH, Vitalik Buterin said in a tweet.
“There will be N+1 assets: ETH (on the eth1 chain or self-staked); N third-party staking derivatives from all the different providers,” he said.
Under the hood, Coinbase will use customers’ ETH to run validators on the Eth2 network, likely taking a small commission in exchange for running the infrastructure necessary to support staking.
With today’s launch of the Beacon chain, ETH staking is officially live for validators. There are now over 21k active validators who have staked 674k ETH, either by directly depositing their crypto or by using staking-as-a-service firms like Staked.
Other projects like Rocket Pool are choosing to wait to launch until smart contract withdraws are enabled. Unlike solutions offered by Coinbase, Binance and others, Rocket Pool is a non-custodial and trustless, a notion that is well-aligned with the DeFi crowd.
Still, the announcement comes as a major signal that Eth2 is here, and the biggest players in the space are now lining up to support what many are calling Ethereum’s largest upgrade to date.