As The Merge Approaches, Crypto Exchanges Compete To Offer Ether Staking

As Ethereum is set to execute 'The Merge' between September 10 and 20, major crypto exchanges have begun to offer users the ability to stake their Ether. Binance, Coinbase, and Kraken have all announced Ether staking services, offering incentives to attract users to the service.

After 'The Merge,' the Ethereum blockchain network will go from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism. The process will give birth to Ethereum 2.0, which is believed to be faster, cheaper, and more environmentally friendly. 

Key Takeaways

  • Several crypto exchanges are offering Ether staking in the lead-up to The Merge.
  • Ether staking is available on popular crypto exchanges such as Binance, Coinbase, and Kraken.
  • The Merge is one of the most highly anticipated events in Ethereum’s history, and investors are paying close attention to the price of Ether.

Exchanges Offer Strong Yields To Attract Staking

Binance.US will offer users passive earning with an Annual Percentage Yield (APY) of 6%, allowing users to stake their Ether in one click. Kraken has also launched the staking service, though the return varies from 4–7%. Both these exchanges note that users will not be able to unstake their staked Ether, which will only happen after the first phase of Ethereum 2.0 completes.

Meanwhile, Coinbase has announced Coinbase Wrapped Staked ETH (cbETH), which represents ETH tokens staked through Coinbase. Unlike Binance and Kraken, cbETH can be sold and traded off of the platform. It does not track the price of Ether, but represents staked ETH and the accrued interest starting from June 16, 2022. What Coinbase is offering is liquid staking, which allows users to stake funds but still have access to them.

Several Ethereum staking pools are also preparing for The Merge. The vast majority of staked Ether is accounted for by major entities. Over 30% of staked ETH is held by Lido Finance, 15% by Coinbase, 8% by Kraken, and 7% by Binance.

Ether Staking Should Become Easier for Retail Investors

The ability to stake ETH was launched last year, but it barred many investors from joining because of the high barrier of entry. It required a minimum of 32 Ether to be staked, as well as running a node.

With exchanges now offering staking services, it will be far easier for the average investor to stake Ether and earn interest. This has been a demand from investors, and it’s likely that more exchanges will begin offering Ether staking. There appears to be a huge benefit, particularly in the case of Coinbase’s cbETH, as it allows users to use their token outside the platform or sell it.

The Bottom Line

As the Merge is one of the biggest events in crypto history, it's understandable that there is a great deal of excitement among the crypto community. The network will transition to Proof-of-Stake, reducing its energy consumption by over 99%. Critics have argued that Proof-of-Work blockchains consume too much power, and this puts those criticisms to rest.

Of course, even with that criticism out of the way, there will be scrutiny of networks and their products. Ethereum itself may be facing review from the United States Securities and Exchange Commission (SEC). SEC Chair Gary Gensler said many times that Ether is security, though there has been no definitive ruling on this matter. There are some experts who believe that the switch to proof-of-stake could prove that Ether is security. Even with these claims and speculations, determining whether Ether is considered a security will take time.

Article Sources
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  1. Ethereum. "The Merge"

  2. Binance. "Binance.US Launches Ethereum Staking with a 6% APY Ahead of “The Merge”"

  3. Kraken. "Ethereum (ETH) Staking & the Ethereum 2.0 Network Upgrade"

  4. Coinbase. "Coinbase Wrapped Staked ETH"

  5. Twitter. ''Coinbase 12:27 PM · Aug 24, 2022''

  6. Dune. "Beacon Chain Depositors"

  7. Ethereum. "Ethereum Staking"

  8. Ethereum. "Ethereum’s Energy Usage Will Soon Decrease by ~99.95%"

  9. Forbes. "SEC Chairman Gary Gensler Implies That Ether Is A Security And Falls Under His Jurisdiction"

  10. Twitter. ''Adam Levitin. 7:47 PM · Jul 23, 2022''

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