What is the best place to stake Ethereum?
The annual base rate at your local bank is close to 0.03%. But what if you could earn 5 to 10% interest on your money? That’s roughly 200 times more than what a traditional bank can offer. All it takes is deciding the cryptocurrency you want to purchase and securing it on a cryptocurrency platform.
In this article, we discuss the best places to stake your Ethereum and earn a healthy return.
Table of Contents
What is Staking?
Staking is when you hold tokens for a certain amount of time, in order to support the blockchain network or DeFi protocol. Staking will primarily be used by blockchains with the Proof-of-Stake – PoS consensus mechanism, where validators need staked tokens to verify transactions.
By simply being rewarded in staking tokens, staking is one of the easiest ways to earn a return on your cryptocurrencies.
Why stake Ethereum?
Staking Ethereum allows the staker to act as a validator on the Ethereum proof-of-stake Beacon Chain and thereby support the infamous Ethereum 2.0.
ETH 2.0 is the long-awaited upgrade to the Ethereum network. This upgrade was made to improve the scalability, speed and efficiency of the network. If you want to act as a validator you will have to make a minimum deposit of 32 ETH, which is an amount that probably is too much for many users.
Nevertheless, users of a central exchange or ETH pool can participate in Ethereum staking. Beware, though! Staked ETH can be fixed for up to 2 years!
What is the best place to stake Ethereum?
The largest exchange Binance will cooperate in validating the Ethereum network. As for the APY, it is not fully clear yet. The APY will be calculated by the staking process and the state of the Ethereum network. Binance promotes an APY as high as 20%.
The exchange will provide ETH depositers the token BETH, which will serve as proof for the deposited ETH. It is possible to exchange BETH to ETH (1:1 basis). BETH will automatically change to ETH as soon as the first phase of ETH 2.0 is completed. Note that this process can take up to 2 years.
Coinbase offers its users an APY of around 5%. This is after deducting a 25% commission on the staking rewards. Coinbase promises to cover any losses that occur if the validator responsibilities are not met.
The exchange will provide ETH depositers the token ETH2, which will serve as proof for the deposited ETH. The downside for Coinbase users is that they cannot withdraw their deposited Ethereum until ETH 2.0 is fully launched.
Kraken offers an APY between 5-7%. This can change depending on the developments of the Ethereum staking protocol, amount of staked ETH or the platform’s commissions. Newly deployed Ethereum will be tied up for a 20 day period or longer before it earns interest. Users wanting to exchange their staked ETH for unstaked ETH can do this on the market ETH2.S/ETH.
Crypto.com offers you to stake Ethereum in three different ways:
- Flexible term (F)
- Fixed term of 1 month (1M)
- Fixed term of 3 months (3M)
Each period is accompanied by a different APY. The longer the fixed term, the higher the APY. Also, users will have access to a higher APY when they buy and stake Crypto.com’s own token CRO.
SwissBorg. offers its users a return ranging between 2.2 – 4.4% by activating their ETH through the Smart Yield portfolio. The Smart Yield portfolio maximizes returns by chasing the highest available return with the least risk.
The APY will vary depending on the type of account of the user. Different returns are offered for Standard, Community Premium and Genesis Premium account types. SwissBorg does not require a minimum investment period, meaning your funds are not fixed for x-number of days.
Lido is a liquid staking solution for ETH 2.0 and lets its users pool Ethereum together. This is done in a decentralized way, meaning ETH is not deposited onto an exchange.
By making the staked ETH liquid, Lido creates a gateway for anyone who wants to stake their Ethereum. Users receive stETH tokens on a 1:1 basis representing their staked ETH. stETH are updated daily to reflect ETH strike rewards.
In general, you will approximately earn between 5% to 7% interest on your staked Ethereum. This annual return will be affected by the commissions charged by exchanges, the Ethereum staking protocol, and the total number of Ethereum being staked. If you believe in the future of Ethereum and want to distance yourself from the poor investment returns of traditional finance, it might be interesting to lock in Ethereum.
Do you have any questions regarding staking or ETH.2.0? Feel free to reply below or join our Telegram community!