Investing in crypto is a buzz these days. Everyone wants to earn a profit by investing in crypto, but it is considered a highly risky investment by financial institutions. Cryptocurrencies are digital currencies not backed by real assets. They are traded between consenting parties with no broker and tracked on digital ledgers which cannot be hacked. Today we’re going to discuss Ethereum stacking on Coinbase Platform and will further discuss whether Ethereum staking on Coinbase is right for you or not.
What is Ethereum staking?
Staking is the act of depositing 32 ETH to activate validator software. Which will help us to earn reward based on certain metrics. This process will keep the ETH secure for everyone and earn you annual staking reward from 6% to 12% depending on the network metrics. In this process you’ll be responsible for storing data, processing transactions, and adding new blocks to the blockchain.
There are many companies that provide you the staking services and these service providers will take care of the entire process for you.
Cost of staking Ethereum on Coinbase
Ethereum is a decentralized, open-source blockchain protocol which is also known as Ether. Among the 100’s of cryptocurrencies in the market, ETH is the second largest cryptocurrency after bitcoin in market capitalization and is extremely secure. However, there are some downsides of Ethereum trading on our environment. Every single ETH transaction consumes energy equal to that of one US household for a week. Which is a major drawback of Ethereum, hence investors find it unattractive investing in Ethereum’s staking. Therefore, Ethereum is about to switch blockchain verification systems from Proof-of-Work to the more energy-efficient Proof-of-Stake which will be implemented on September 22nd.
This decision has been criticized by the crypto investor community also many. Many other liquid staking offerings in the market do not have this blacklist feature. Coinbase Wrapped Staked ETH (cbETH) has a blacklist function in the smart contract.
In the smart contract feature of Coinbase, cbETH now came along with a blacklist function. It will permit now Coinbase to blacklist those addresses which need to do so. Coinbase is planing to Blacklist Staked Ethereum if it finds that the wallet does not obey its user agreement. The exchange have further power to block the fund of the customer.