Coinbase is expanding its staking program in Germany and will soon include Ethereum there. This means that up to 5 percent annual interest can be expected for ETH, which is deposited for Ethereum 2.0.
Word has got around among investors that staking can be used to generate good annual interest rates for various cryptocurrencies. Since Coinbase was approved by the Federal Financial Supervisory Authority (BaFin) in Germany, the US crypto exchange has also included staking in its program in Germany. Tezos (XTZ) and Cosmos (ATOM) started in early August. Coinbase has now set up a waiting list for Ethereum (ETH) staking and promises to soon offer ETH2 staking for customers residing in Germany. There should then be up to 5 percent annual interest for the Ethereum brought in.
Staking Ethereum – that has to be taken into account
With Tezos or Cosmos, stored tokens can also be withdrawn from Coinbase’s staking pool at any time. Because at XTZ and ATOM, the blockchains are already based on the Proof-of-Stake protocol. Coins brought in for staking increase the security and stability of the network, for which there are bonuses.
With Ethereum, the situation is a little different. Ethereum’s mainnet is still based on the Proof-of-Work protocol. In order to make the ETH ecosystem future-proof, work is being done on converting to Ethereum 2.0 and thus Proof-of-Stake as a protocol. Part of the preparations for this evolution is a large-scale test network from ETH2 called Beacon. There, staking rewards are paid out for deposited Ethereum. From a technological point of view, ETH is exchanged for ETH2 with Ethereum staking.
This is where the catch lies: ETH2 are set in beacon and can actually no longer be withdrawn or used for any other purpose. These ETH2 will only become normal Ethereum again when the mainnet has switched to Ethereum 2.0, Coinbase also explains transparently. Experts no longer expect Ethereum 2.0 this year. In plain language: Staking of Ethereum 2.0 gives you up to 5 percent annual interest at Coinbase, but in return you agree to set your ETH there for a longer period of time.
Conclusion: Ethereum staking at Coinbase for medium and long-term strategies
Staking at Coinbase and other crypto exchanges such as Binance is basically a safe method to let credit in qualified altcoins work passively. Ethereum is a special case in this context, as the protocol switch is still in progress. If you are thinking about your investment in Ethereum in the medium or long term anyway, Coinbase’s offer is fair with up to 5 percent annual interest.
However, if you would like to have access to staked ETH again at short notice and have basic knowledge of DeFi, the method that Lido offers in conjunction with the Ledger Nano S or Nano X hardware wallets is more suitable. The target annual interest rate may be a little lower here, but you can also deduct ETH via a detour through DeFi before Ethereum 2.0 becomes a reality. In any case, staking remains a silver bullet to securely generate interest on credit balances in Ethereum and other suitable altcoins.
If you don’t have a Coinbase account yet, you can create one here. New customers get BTC worth 10 US dollars for free.