Coinbase Introduces Ethereum Staking to US Institutional Customers
Coinbase Prime – an integrated solution that offers secure custody, an advanced trading platform and premium services – has introduced an Ethereum staking service aimed at business customers in the US.
The Coinbase exchange described the addition of Ethereum to the staking options for US institutional investors as an important feature designed for financial institutions that want to enter the cryptocurrency industry but are hesitant to do so.
The exchange said the betting service gives companies an opportunity to earn passive income by avoiding risk. The product offers yet another cryptocurrency on-ramp for institutions that have become interested in the industry’s explosive growth but haven’t always known how to get in.
Generating returns through investment plays an important role for large firms that are often looking for attractive places to invest their money.
Coinbase Prime also offers staking services for Solana, Polkadot, CosmosTezos and Celo tokens, the exchange said in a blog post on Monday.
Speaking about the development, Aaron Schnarch, Vice President of Product, Custody at Coinbase, said institutional customers can create a wallet, decide how much to stake and start staking ETH in their Coinbase Prime account.
According to the exchange, withdrawal keys are held in Coinbase’s cold storage vault, and the staking process occurs through the validation of new cryptocurrency transactions on a proof-of-stake blockchain.
Coinbase has launched its staking services to take advantage of “the Merge”, the highly anticipated upgrade of the Ethereum network.
Wagering of rewards
Staking allows customers to earn a return on their cryptocurrencies by putting them into a pool of assets, which helps support the liquidity and operation of a blockchain ecosystem. Staking is often compared to a high-yield savings account where investors can earn more than 20% in annual returns on some platforms.
But that practice does not come without risks. Wagering normally requires customers to store their money with a third party called a “custodian”, who technically owns the funds while they are wagering. A few months ago, investors experienced heavy losses of funds when managers such as Celsius Networks, Voyager Digital, among others, went bankrupt after the crypto markets crashed.
In January of this year, institutional crypto custody company Anchorage introduced Digital Ether staking for institutions.
The San Francisco-based federally chartered crypto bank began offering ETH holders the ability to earn rewards for their holdings.
Anchorage also planned to expand its Ethereum blockchain service when the network moves to a proof-of-stake (PoS) mechanism later this year.
“The Merge” – the upgrade that will move the blockchain from a proof-of-work (PoW) consensus mechanism to the Proof-of-Stake (PoS) alternative consensus mechanism – is expected to begin next month. The transition to PoS, which is supposed to be faster and more energy efficient than PoW, is now expected to happen on September 19.
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