Binance is the latest major crypto exchange to launch US Ethereum rests on its platform.
The company announced on Wednesday that users can now stake the second largest cryptocurrency by market cap and earn rewards at a starting rate of 6% APY.
This is a big step up from major competitors like Lido and Coinbase, which currently offer 3.5% And 3.25% APY, respectively, bets on ETH. Crypto lending platforms like BlockFi and Nexo offer only 4% and 5% APY respectively on ETH staking, despite using relatively high riskHigh-reward business model.
However, there are staking rewards subject to change Based on the amount of Ethereum transaction fees, among other factors, according to Binance US.
“As the Ethereum network continues to move towards the merger, we are thrilled to now offer ETH staking with some of the highest APY rewards in the industry,” Brian Schröder, Binance US CEO, said in a press release.
“Sickness”“Refers to the long-awaited upgrade of Ethereum that combines the consensus layer of the network, known as the Beacon Chain, with its execution layer, which is the current Ethereum mainnet, This merge allows the transition of Ethereum to a . will complete from proof-of-work consensus mechanism proof of stake
The merger is currently expected to take place between September 13 and 15. After that time, Ethereum users will be able to stake their ETH to help secure the network while earning passive ETH rewards in the process.
Based on the current number of beacon chains, Ember Group, a crypto financial services firm, is Estimated Rewards for validators can range between 8% and 12% APY. But there’s a catch.
To become a single stacker, users must pledge at least 32 ETH to the network. It costs around $50,000 at current prices, which is the price for most average users.
Therefore, users have increasingly turned to using centralized staking platforms, known as staking pools. Although these providers earn fees that cut into stakers’ profits, they significantly lower the financial barrier to entry. For example, Binance US only requires 0.001 ETH to get started, which is roughly $1.50 worth of ETH at today’s prices.
But it has also raised concerns about the potential Centralization of the Ethereum NetworkAnd how this could affect its ability to remain censorship-resistant as US regulators increasingly set their sights on crypto.
At the moment, there are only four staking providers – Lido, Kraken, Coinbase and Binance –control About two-thirds of the stake is ETH. That means some large companies currently have a significant role in validating transactions on the network, which has raised concerns that some transactions may be censored at the protocol level, given the Treasury Department’s sanctions against Tornado Cash last month. .
Coinbase CEO Brian Armstrong tweeted in mid-August that he would soon Close your company’s staking business compared to censored transactions. It is not yet clear how other centralized firms will react when threatened by regulators.