Coinbase Prime has added Ethereum (ETH) to its staking list for domestic US institutional customers, Coinbase said in a blog post Monday.
According to an announcement early this morning, institutional customers can now create wallets, decide on staking amounts, and start staking on their Coinbase Prime accounts.
Coinbase “makes sure customer funds are the highest priority.” They added that all withdrawal keys are kept in the company’s cold storage and that staking transactions must complete consensus before they can be executed. This means they must be added to a blockchain before a transaction can be considered valid.
Besides ETH, Coinbase Prime is also opening staking for a number of other cryptocurrencies such as Solana, Polkadot, Cosmos, Tezos, Celo…
Staking is only possible on blockchains using the Proof-of-Stake consensus mechanism, which forces network participants called validators to “lock” a certain amount of tokens. their.
Currently, Ethereum is in the process of transitioning from a proof-of-work (POW) consensus mechanism to a proof-of-stake (POS) aka “The Merge”, the transition is expected to happen. released in September, at which point Ethereum mining will be phased out.
Staking allows investors to earn profits from their cryptocurrencies by pledging them to a pool of assets, helping to support the liquidity and functioning of the blockchain ecosystem. Often compared to a high-yield savings account, investors can earn up to 20% annual return on some platforms.
But the reality is not without risk. Staking typically requires investors to store their funds with a third party known as a “custodian” who will technically own the funds while it is being staking. Earlier this year, investors saw billions of dollars wiped out as custodians like Voyager and Celsius went bust in the wake of TerraUSD’s demise.