The Phase 0 of ETH 2.0 successfully launched today, bringing a long awaited update to fruition. The updated version of Ethereum relies on the Proof of Stake consensus as opposed to the older version’s Proof of Work. However staking on ETH 2.0 isn’t always easy for non tech savvy people, or people with little funds. Binance‘s launch of ETH 2.0 on the 2nd of December offers a solution to both problems.
How to stake ETH on Binance
Before looking into the advantages and caveats of staking ETH on Binance, let’s take a look at how the staking is done:
Step 1: Log into your Binance account and head to the staking page
After logging into your Binance account, head over to the following page: https://www.binance.com/en/cftoken, then click on “Stake Now”.
Step 2: Select the amount of ETH you want to stake
Type in the amount of ETH you wish to stake in the blank and hit “Confirm”. That’s it, you’re done. You’re now staking on ETH 2.0.
Track your rewards
Once you’re done staking your ETH, Binance sends you BETH on a 1:1 ratio to your staked amount. The BETH token will be sent to your wallet sometime in January 2021, but you can start staking as of Dec 2nd 2020. Until you receive your BETH tokens, you can see your rewards accumulating on the same page you used to stake.
Binance will pay for expenses of running validators and bear the risk of on-chain penalties. Staking rewards will be distributed to its users.
Benefits and drawbacks of staking ETH 2.0 on Binance
Pros: No tech skills required
No tech skills are required to keep up a validator node. Binance will take care of this.
Pros: Less funds required
Staking on ETH 2.0 requires a minimum of 32 ETH (~$18,900 at the time of writing). Staking service providers such as ANKR lowers this amount to 0.5 ETH. However, you can stake ETH 2.0 on Binance with as little as 0.0001 ETH (~0.06$ at the time of writing).
Pros: Liquidity of staked funds
When you stake your ETH you lose access to your funds until the next phase of ETH 2.0 is launched. Depending on its development, this may take over 2 years! During this time you will be accumulating rewards but have no way of getting to your Ether.
When staking on Binance, you receive BETH on a 1:1 ratio to your ETH investment. Binance has declared it could make BETH open for trading in the future! This would give stakers the benefits of high rewards while also maintaining the possibility to sell their staked assets if they want to.
Staking rewards will amount between 5% and 20% APY, depending on how much ETH is staked. This is the same regardless of where you stake your ETH.
Additionally, Binance has announced the time going from the Dec 2nd to Dec 16th as a “Double Rewards Activity”, where users will receive additional BNB tokens equivalent to the amount of rewards the user would be earning.
Cons: Not your keys not your crypto
Staking on Binance means that you effectively hand over custody of your ETH to the exchange. While some crypto purists are vehemently against doing so, other less tech savvy crypto enthusiasts might be more accepting of this, seeing as they are unable to run a validator node themselves.
Binance has constantly expanded the pallet of their products in the recent year or two. In addition to its centralized exchange, Binance now offers its own DEX, a Swap, staking, savings accounts, yield farming, and even boasts its own smart chain amongst many others. Staking ETH 2.0 through Binance is easier, cheaper, doubles your rewards (at least for a short while) and could potentially saveguard your coins’ liquidity. The small drawback would be losing custody of your ETH until the launch of 2.0’s next phase.