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Coinbase announces it will support Ethereum 2.0 staking

Photo of: Nathan VDH
by Nathan VDH

As the Ethereum 2.0 network has just been launched, Coinbase announces a staking service. While Ethereum 2.0 is still in its infancy, Coinbase has already announced its support via its blog.

The cryptocurrencies exchange platform has announced that it will offer its customers a staking service on Ethereum 2.0. In addition to this service, it would also support the trading of the ETH2 token against ETH and other cryptocurrencies taken into account by Coinbase.

“We will launch the above features to customers in eligible jurisdictions beginning in early 2021. We will provide more details as we approach the launch of each feature. ยป

As a reminder, Ethereum 2.0 marks the transition of the consensus mode from Proof of Work to Proof of Stake. To verify the validity of a transaction, people will use blocks that have been staked by others and the fees for these transactions (which should be marginal compared to the old system) will be given to those who stake their Ethereum.

In this new consensus mode, minors are replaced by validator nodes. To take part in the validation process, a validator will have to seal at least 32 ETH. Thus, via its new service, Coinbase may want to remove this constraint in the long term – leading some commentators to imagine shared validator services in the future.

Nevertheless, although this solution offers many advantages, particularly in terms of logistics (server installation, maintenance, etc.), it has the serious disadvantage of relying on a centralized third party.

In the end, this solution will only be ideal for people without technical skills, if decentralized alternatives do not emerge. If price continues to increase and 32ETH becomes too much to invest for a lot of people, this might also alleviate the burden while still allowing users to get their rewards.

The launch of Eth 2.0 went out without a hitch but the market price did lose about 10% after the news, which it has quickly recovered since.