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Coinbase Prime Increases Its Stake With ETH | by Coinbase | August, 2022 - India Blogger

tl:dr: We are launching Ethereum staking for US domestic institutional clients on Coinbase Prime. Using our industry-leading cold storage, customers can now generate yields by staking ETH.

By Aaron Schnarch, Vice President of Product, Custody

Fully Integrated Staking on Coinbase Prime

Coinbase Prime provides institutions with an end-to-end staking experience. Customers can create a wallet, decide how much to wager, and start staking from the ETH asset page on their Coinbase Prime account.

Securing customer funds is our top priority. We keep withdrawal keys in our cold storage custody vault at all times, which means that ETH staking and accumulated yield are always safe. In order to further ensure the security of customer accounts, there must first be full consent before a staking transaction can be executed.

ETH vs ETH2

The term eth2 is often used to describe an upgrade to the Ethereum network that aims to improve the security and scalability of the network. This upgrade includes the shift of Ethereum’s security model from mining (“proof-of-work”) to staking (“proof-of-stake”).

Once a customer places their ETH, our system uses the ticker ETH 2 to represent the ETH tokens that have been staked. Note that there is no separate/new “eth2” token or asset. ETH and ETH2 have the same price. Once the upgrade to the Ethereum network is complete, the ticker ETH and ETH 2 will merge into a single ticker: ETH. The merge is currently expected to take place in September 2022, so going forward you will see that the term ETH2 is not in use.

Why are institutions placing bets?

Staking can provide passive income on assets already held in custody by providing the underlying blockchain with a useful function as a security. The Ethereum blockchain rewards stakers who do a good job, but also penalizes those who fail in their duties, for example when there is downtime. This is why it is important to partner with a reputable and effective provider to earn maximum rewards while minimizing the risk.

Staking rewards can be equated to compound interest for most assets, not unlike traditional markets when dividends are reinvested. Since the reward is paid out in the tokens placed at stake, users can “reinvest” those tokens to receive higher payouts in the next period. Furthermore, staking tokens are usually stored in their respective wallets, meaning users earn yields without rehypothecation.

betting on coinbase prime

With Coinbase Prime, institutional clients have the ability to stake their ETH and many other assets to generate yields. Staking is also supported for Solana, Polkadot, Cosmos, Tezos, Celo and others. Read more about institutional stake in our Staking 101 for Institutions article.



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