Coinbase, the most popular US platform to buy and sell cryptocurrencies, will open an option for its US domestic institutional clients to stake Ethereum (ETH).
This move, which Coinbase says it provides another crypto on-ramp to institutions looking to enter the crypto space, comes in anticipation of the Ethereum network’s long-promised shift from proof-of-work (PoW) to the proof-of-stake (PoS) protocol.
Coinbase announced earlier last year its intention to introduce ETH staking — a practice of earning rewards for serving as a transaction validator in the Ethereum blockchain — for institutions. At the time, the exchange introduced a waiting list for the product where select customers were able to stake and earn rewards on a portion of holdings rather than their entire balance, should they wish to.
Coinbase will manage this process for its customers in the hope of making the product more accessible for US institutions. The company said in a press release that “once a client stakes their ETH, our system uses the ticker ETH2 to represent those staked ETH tokens.”
“Note that there is no separate/new “eth2” token or asset. The price of ETH and ETH2 is identical. Once the upgrade to the Ethereum network is complete, the tickers ETH and ETH2 will merge into a single ticker: ETH. The merge is currently expected to occur in September 2022, so moving forward you likely will see the term ETH2 fall into disuse,” the exchange explains.
Coinbase supports staking of major coins
With Coinbase Prime, institutional customers can also stake a number of other assets to earn passive income. Staking is also supported for Solana, Polkadot, Cosmos, Tezos, Celo, and more.
The US platform has been instrumental in the growth of the DeFi movement, listing many up-and-coming projects for its users. Earlier in March, Coinbase introduced a staking service for Cardano (ADA), which enables users to earn dividends or interest on their token holdings just for depositing and holding the token on the platform.
The process involves the users delegating their token holdings to those running the blockchain software in exchange for sharing some profit.
The decision was taken in the context of huge interest from retail investors who were open to the idea of earning interest on their crypto assets. The US major crypto venue is also no strange to staking rewards as it already offers the service for holders of Algorand, Cosmos, and Tezos.
Meanwhile, Coinbase isn’t the only one platform doing staking as other large crypto exchanges also expand their staking-as-a-service offerings. Staking, the company explained, enables users to earn dividends or interest on their digital assets for validating transactions and also allows them to vote on changes in the blockchain.