Coinbase Prime – an integrated solution that offers secure custody, an advanced trading platform and prime services– has introduced an Ethereum staking service targeting corporate clients in the US.
Coinbase described the addition Ethereum to its stake options for US institutional investors, as an important feature for financial institutions that want to enter the crypto-money industry but are hesitant about doing so.
The exchange stated that the staking platform gives companies an opportunity for passive income and to avoid taking on risks. Institutions interested in cryptocurrency’s rapid growth will find another way to access it through the product.
Big firms often look for places that offer attractive returns when they invest their money. Staking is a great way to generate yield.
Coinbase Prime also offers staking for Solana, Polkadot and other currencies CosmosTezos tokens, Celo tokens, and Tezos was what the exchange stated in a Monday blog post.
Aaron Schnarch, Coinbase’s Vice President of Product, Custody, discussed the development. He explained that institutions can create a wallet, determine how much they want to stake, then begin staking ETH in Coinbase Prime.
According to the exchange, withdrawal keys are held in Coinbase’s cold storage custody vault, and the staking process happens 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.
Earn rewards by staking
Customers can earn a return on their cryptocurrency investments by placing them in a pool. This helps to support the liquidity of a blockchain ecosystem and its operations. Staking can often be compared with a high-yield savings account that allows investors to earn over 20% per year on certain platforms.
But, this practice is not without risk. Staking normally requires customers to store their money with a third-party called a “custodian,” who technically owns the funds while they are being staked. Investors suffered huge losses when custodians like Celsius Networks and Voyager Digital went bankrupt following the crash of crypto markets.
Anchorage Digital, an institution crypto custody company, introduced Ether staking to institutions in January 2018.
The federally chartered crypto bank in San Francisco began offering ETH holders rewards for holdings.
Anchorage also plans to expand its Ethereum blockchain services once the network transitions to a proof of-stake (PoS), later in the year.
“The Merge” – the upgrade that will shift the blockchain from a proof-of-work (PoW) consensus mechanism to Proof-of-Stake (PoS) alternative consensus mechanism – is expected to begin next month. PoS is expected be completed by September 19th. This is a faster and more efficient alternative to PoW.