Coinbase Ethereum
Coinbase Ethereum
What's the Confusion when it comes to Coinbase Ethereum?
There's, a lot of confusion when it comes to Coinbase Ethereum staking and how to get started. Staking means that you take your crypto, you lock it up, similar to a savings account. You stake it and in doing this you can help secure the blockchain.
Now when it comes to Ethereum staking you need thirty-two Ethereum to stake, but many people, don't have 32 Ethereum. So, what do they do? They give their Ethereum to a company such as Coinbase. Coinbase will pull them together to create thirty-two, and then they will stake it. When it comes to staking rewards with Ethereum there is a maximum amount that can be earned, in the early days it was as high as 21%, but the more people that stake, the less it becomes, and right now we're at about 7.6%. Now the only way to get 7.6% at the moment is if you stake thirty-two Ethereum yourself and you set up a validator node, but as I previously mentioned many people out there don't have thirty-two Ethereum, so they give it to a company like Coinbase which then they charge a percentage for their staking service to pool everyone together. No one works for free right?
Coinbase Ethereum: How Much Can I Earn?
So when you stake your Ethereum with Coinbase, you're not going to get 7.6% right now, for example, you're, going to get 6% because they are charging you a 1.6% fee for staking Ethereum. One thing that you do need to understand is that once you stake your Ethereum on Coinbase it is locked for possibly a year or less as things transition to Ethereum 2.0. So, while your Ethereum is locked you cannot sell it or convert it to another crypto currency. You will continue to earn interest while you stake your coin and once Ethereum 2.0 is released you will receive your Ethereum in Ethereum 2.0 along with the interest earned. Now, while you are staking your base Ethereum amount, you can still purchase new position in Ethereum, just the amount that you initially staked cannot be sold or converted into other crypto.
Now the most common question that I get from people is, if I put let's, say a three thousand dollars’ worth of Ethereum and then it goes to ten thousand or maybe uh, 20,000, or maybe it goes to 1,000. What is the price point that Coinbase will choose to pay out right? Are they going to say it's worth 3,000? Are they going to give me interest on 10,000, and the answer is neither, the interest with Coinbase Ethereum staking, along with every other staking out there in crypto will be paid out in crypto. It will not be paid out in dollar amounts. For example, if you stake one Ethereum, you will get six percent on one Ethereum point: zero, six Ethereum the price of Ethereum is irrelevant whether it is high or low.
Getting Paid After Staking
You will always get paid out in crypto right, one Ethereum 0.06 Ethereum at six percent APR, and this is beneficial for many people, because when you get your staking reward paid out in crypto, this means as the market grows, your staking rewards will grow as well.
So, if you stake Ethereum today at six percent APR at this rate, if it stays at this rate for 365 days, you will get six percent, but, as we know, in crypto rates do not stay the same. Even when we talk about Ethereum staking on Coinbase, the price fluctuates daily, weekly, monthly. The more people that stake, the lower. So, when it comes to crypto and staking everything happens, pretty much in real time this isn't like traditional finance, where they say if you lock it up for three months you get this APR.
Now, can I still buy new Ethereum and the answer is yes, you can stake a hundred dollars’ worth of Ethereum, and you can still buy more Ethereum in the market and you can take that new Ethereum and you can stake it as well.
Now the benefit of starting early is you get those higher rewards right now, as I mentioned on Coinbase, you're, getting six percent and as more people stake, so at some point this will go down on Coinbase. Eventually It will go to five percent and then four percent as more and more people start staking.
So, the earlier you start the higher rewards you will get. So, we see that when you stake on Coinbase right, you're not going to have access to your Ethereum crypto for a while. But then there are platforms out there, such as Voyager or Block-Fi, where you can lend your crypto no lockup period and you can earn the same rates and people ask why would someone stake when they can go to these lending platforms? The first answer is easy, Coinbase Ethereum staking is simple: it's, easy to use. They're on Coinbase, they stake and they start earning money, they set it and forget it. It’s safe and secure.
With Voyager and Block-Fi all these places right. They have to create a new account, they have to get verified by submitting their IDs to validate their identities, then connect their banking account, withdraw the money, or transfer Ethereum from one wallet to another and maybe people don't want to do that. Who wants to go through all that hassle?
At the end of the day, whether you stake or not is a personal preference. Coinbase does a great job of making it easy for it users to stake their Ethereum. The question is will you?