Staking ETH is a unique way to earn rewards on your digital assets. Learn how ETH staking works, the benefits it has to offer, and how to get started.
Staking Ethereum (ETH) is a unique way to earn rewards on your crypto without having to make profits from trading.
In this article, you’ll learn how ETH staking works, the benefits it has to offer, and how to get started.
What Is ETH Staking?
Ethereum is a programmable, decentralized blockchain platform for smart contracts that allows users to build and deploy decentralized applications (dApps) on its network. Most notably, the Ethereum network is home to a vibrant ecosystem of crypto projects — and remains the world’s most popular platform for dApps.
Its native token, Ether (ETH) is the number one most commonly staked asset by Total Value Locked (TVL) and the second largest cryptocurrency by market cap. ETH is used for a variety of purposes, including:
- Settling gas fees on the Ethereum network
- Serving as a medium of exchange on the Ethereum network
- Powering the Ethereum network’s ecosystem of decentralized apps (dApps) and non-fungible tokens (NFTs)
- Payment asset for select third-party services
Staking is a way for new and long-time cryptocurrency buyers and sellers to earn rewards on their holdings.
In the case of ETH staking on Binance.US, staking is performed by committing ETH tokens towards securing the asset’s Proof-of-Stake (PoS) network.
It's important to note that on September 15, 2022, Ethereum (ETH) successfully transitioned from Proof-of-Work (PoW) to a PoS consensus mechanism.
The transition to PoS is designed to help Ethereum become a more scalable and efficient platform, theoretically allowing it to verify transactions in a more energy-and-cost-efficient way.
With the Ethereum network having successfully transitioned to PoS, staked ETH is used to verify transactions, facilitate decentralized governance, and bolster the network’s resilience. To make it practical for holders to engage in ETH staking, the network generates rewards as an incentive.
Getting involved in ETH staking on your own can be a complicated and labor-intensive process — so much so that most people don’t have the technical skill or computer hardware necessary to make it work.
That’s where crypto platforms, like Binance.US, come in. These platforms provide the technical know-how and user-friendly interface necessary to make ETH staking practical and beneficial for anyone and everyone.
Before you get started, it's important to note that when you stake ETH on Binance.US, we initiate the staking process on your behalf and pass the rewards on to you. Unlike most staking assets on Binance.US, you will not be able to access, use, or withdraw your ETH until a subsequent major upgrade referred to as the ‘Shanghai upgrade’ has taken place.
Binance.US has no influence or control over the risks associated with the subsequent Shanghai upgrade, which will enable staking withdrawals. There is no guarantee that there will ever be a successful completion date for the Shanghai upgrade. If the network upgrade ultimately fails, you may lose all, or a portion of, your staked ETH.
Like all assets on Binance.US Staking, staking rewards are not guaranteed and are subject to change at any time and in the sole absolute discretion of Binance.US.
Benefits of ETH Staking
1) Earn APY Rewards
One of the biggest benefits of ETH staking is the ability to earn rewards on your funds, which are typically calculated in the form of Annual Percentage Yield (APY) and refer to the rate of return that users can expect to receive on a staked asset.
It’s important to remember that APY may vary depending on certain factors, such as:
- Cryptocurrency staked
- Network conditions
- Staking configuration
- Supply and demand
Thanks to the rewards you can earn, ETH staking offers you a way to build your portfolio while investigating or diversifying into other strategies — including ones that involve trading.
2) ETH Staking Made Accessible
Binance.US also makes it easier and more accessible to stake ETH. With the minimum staking amount set to as low as 0.001 ETH, or under $2 at the time of writing, customers can easily lock in their ETH and enjoy the benefits of staking.
ETH Staking Tips
1) Form a Strategy
Before getting involved in ETH staking, form a strategy that covers important details, such as:
- How much you want to stake
- The benefits you hope to achieve
- The types of returns you want to earn
- The minimum APY rewards you’ll accept
The more well-rounded and complete your strategy, the better prepared you’ll be to deal with the ups and downs of the cryptocurrency market and stay out of positions that are detrimental to your portfolio.
As previously noted, ETH staking on Binance.US may only be right for you if you are okay with locking in your assets and waiting for the next major Ethereum "Shanghai" upgrade to potentially enable withdrawals — in the event it is successful. Therefore, unlike other staking assets on Binance.US, ETH staking may only be suitable for those looking for long-term growth opportunities.
As you develop your strategy, don’t be overly influenced by what others are doing. No two individuals will share the exact same approach to the market, so build a plan that works for you.
2) Create a Crypto Wallet
Just like the wallet you carry in your pocket, a crypto wallet is a place for those involved in the cryptocurrency market to store and manage their crypto funds.
Though crypto wallets can come with a variety of features, they generally fall into one of two categories: hot wallets and cold wallets.
Hot wallets are those that online crypto platforms offer to their customers and are usually software or cloud-based.
Cold wallets, on the other hand, are those that store cryptocurrency offline in a more tangible asset, such as an external drive.
If you have the right technical knowledge, hardware, and funds to get started, you can create a crypto wallet and get involved with ETH staking on your own.
The vast majority of users, however, will be better served by staking ETH on a platform like Binance.US.
When you partner with a crypto platform, you can earn rewards without having to operate and maintain your own validator hardware or go through the long, complicated process to get your ETH staking up and running.
3) Research the Minimum ETH Staking Requirements
The minimum ETH staking requirements will vary from platform to platform and blockchain project to blockchain project — however, Binance.US allows customers to stake from as little as 0.001 ETH.
Research those minimums before getting involved so you have the funds available to adhere to the strategy you developed earlier.
ETH staking is a great way to get started in the cryptocurrency market. But, if you have all of your eggs in one basket, so to speak, you’ll be more susceptible to the volatility of the market.
One of the best ways to protect yourself from becoming overexposed is to diversify your portfolio.
Though you may settle a large percentage of your funds in ETH staking, you can set up a safety net of sorts by staking other coins or by getting involved in an entirely different part of the crypto market (e.g., buying, selling, or trading).
Start Staking ETH Today
Legal disclaimer: This material has been prepared for general informational purposes only and should NOT be: (1) considered an individualized recommendation or advice; and (2) relied upon for any investment activities. All information is provided on an as-is basis and is subject to change without notice, we make no representation or warranty of any kind, express or implied, regarding the accuracy, validity, reliability, availability or completeness of any such information. Binance.US does NOT provide investment, legal, or tax advice in any manner or form. The ownership of any investment decision(s) exclusively vests with you after analyzing all possible risk factors and by exercising your own independent discretion. Binance.US shall not be liable for any consequences thereof.
Staking Disclaimer: Binance.US has no influence or control over the risks associated with subsequent Ethereum upgrades, which will enable staking withdrawals. There is no guarantee that there will ever be a successful completion date for the Shanghai upgrade. If the network upgrade ultimately fails, you may lose all, or a portion of, your staked ETH.