The U.S. cryptocurrency exchange, Coinbase, has also finally joined the companies that have been offering Ethereum 2.0 staking for some time.
ARE ETHEREUM STAKING WAITING LISTS OPENING ON COINBASE?
With COINBASE announcing yesterday to open its waiting lists, it has slipped roughly two months compared to its serious competitors. Stacking usually requires 32 ETHs, but Coinbase has made an offer to its users that anyone with authentication IDs can board with any number of ETHs to validate the block.
The statement shows that they could not say an exact profit number either. However, if we start from the other stackable cryptocurrencies, we can see that there will not be so few. Coinbase rated it at a minimum of 7.5%, but preferred to raise it above 9% for sure. Coinbase will deduct a pro rata commission after the rewards.
“The company charges a commission for all the rewards it receives, and our customers’ rate of return reflects that commission, ”Kaw said.
So under the contract, this commission is 25% of the rewards you receive, so that’s what Coinbase pockets out of it.
In addition to the Ethereum 2.0 staking facility, users can also deposit Algorand (ALGO (-2.39%)), Cosmos (ATOM (-7.13%)) and Tezos (XTZ (-4.77%)) tokens.
WHY ETHEREUM 2.0 NETWORK?
Ethereum 2.0 offers much more than the best-known cryptocurrency, Bitcoin. Ethereum is a platform where we can create smart contracts, develop applications (dApps or Decentralized Applications) or issue our own cryptocurrencies. The latter are called ERC-20 tokens, such as BAT, OMG, VET, EOS, but we could list many more.
When a dApp, CryptoKitties, became available in 2017, where unique fictitious cats could be exchanged over the Ethereum network, a serious problem arose. The platform traffic increased so much that the validators could not serve the needs, there was too little network computing capacity. After these events, it became clear to the developers that if the developments progressed this way, fast service on the Ethereum network would be unsustainable and various transaction requests would be congested. We saw a similar problem in the second half of 2020, when several DeFi (Decentralized Finance) platforms were launched.
SWITCHING FROM POW TO POS
Transactions running on a blockchain need to be validated, several forms of which are now known. One of these, Proof-of-Work, was originally designed to ensure that the system of cryptocurrencies could not be easily circumvented. If you like, the transaction is made much more complicated by the system in order to deter bad faith users. Miners can increase the amount of their reward by increasing the performance of their computer, thus gaining more “mining power”. The problem with this is that it takes a lot of energy to get a secure network.
Among other things, Proof-of-Stake finds a solution to this problem, where “mining power” is directly proportional to the amount of capital tied up. Block validation is done by those who invest money in the system. Of course, this does not mean that the new system is better than the old one in all respects. As a positive aspect, it is most often mentioned that this system is more efficient, there is no need to spend unnecessary time on validation. It should also be mentioned that only validators who believe in the system are involved in the execution of transactions. This is evidenced by the fact that they invest a huge amount of capital in the system that they can lose if they try to cheat. On the downside, this system favors those with large capital, as they will be able to validate most blocks.
ETHEREUM 2.0 STAKING
Anyone who wants to validate a block themselves will need their own hardware and 32 ether. (The ability to join different pools still exists, so you don’t need your own equipment and no problem if less capital is available.) Determined entrepreneurs who choose to validate will commit to a relatively foggy present and long term. in the future. Validators have to reckon with having to be involved in transactions on a continuous basis for up to several years, otherwise they may lose some of their committed money. This is because there is no fixed date for when the committed quantity can be released. Therefore, Ethereum staking currently appears to be a relatively risky story. But this high risk can also have benefits.
PHASES OF ETHEREUM 2.0
Initially, the new network will not conduct smart contracts. Phase 0 will be about setting up the basic pillars of the PoS mechanism and the Beacon Chain, as well as covering the layout of the validators and their balances. Phase 1 will focus on setting up Shards, with data to be properly disaggregated and distributed among 64 Shards. The second step is already trying to merge the old and the new platform. Finally, smart contracts will also be available in Phase 2.
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