The second-largest cryptocurrency in terms of market capitalization, Ethereum, is undoubtedly the most utilized blockchain network in the world. The major reason behind this use case is the smart contract-based applications called DApps. It is known to all that the Ethereum network operates on the Proof of Work consensus mechanism at present, but due to this mechanism, the current transaction per second (TPS) is somewhere between 15-20 transactions. Well, for a network that has been adopted on such a huge scale, the transaction per second is notably less.
Moreover, the gas fees, or the cost of transactions, on the Ethereum network is way too high, which has certainly become a barrier to the further adoption of Ethereum. The good news is that the Ethereum network is scheduled for the most notable upgrade to date, known as Ethereum 2.0. The upgrade will shift the consensus mechanism of the Ethereum network from Proof-of-Work to Proof-of-Stake. The change in consensus mechanism would reportedly raise the transaction per second to 100,000 transactions and drastically decrease the cost of the transaction by over 90%.
Interestingly, over 2800 decentralized applications are built on Ethereum, and this metric data comprises more than 80% of the total decentralized applications all over the world. Though we can not deny the fact that Ethereum has surged well both in terms of popularity and price, this worldwide adoption and success of Ethereum have acted against the scalability of Ethereum.
In this article, we will be discussing the best Ethereum staking platforms in 2021. First of all, we are going to talk about the centralized staking service providers in the market, and then we will be moving towards the decentralized service providers.
Here, options are limited for an individual who intends to stake his Ethereum holdings and earn rewards. Becoming a node operator is one option for staking Ethereum. However, it should be noted that this method of staking your ETH comes with some limitations:
The best option of staking ETH is making use of Ethereum Staking Platforms, and here, in this article, we have listed some significant names in this field.
Known as one of the oldest crypto exchanges, Kraken has a significant market share in terms of providing exchange services and along with this, the platform also provides its users with staking services. Talking about the annual rewards the user will be getting, it varies from 5-7% per year, and the rewards will be granted to the user after the commission charges have been taken by the provider. Following the step of staking the Ethereum tokens on Kraken, the user will be acquiring a derivative token that represents the staking of the ETH tokens, the ETH2.S token. ETH2.S token will come with the ability to be traded on Kraken just like other tokens listed on the exchange.
Coinbase, the crypto exchange founded back in the year 2012, is reportedly the biggest crypto exchange in the US in terms of trading volumes. Along with the trading and holding crypto assets services, Coinbase also offers its users staking services. As revealed officially, the user with Ethereum held in its portfolio will have the ability to stake their assets through the Coinbase platform and gain an expected return of 5% annually. However, it should be noted that these returns are not fixed, and they may vary due to several reasons. Coinbase is one of the best Ethereum Staking platforms in 2021.
Binance is yet another one of the best Ethereum staking platforms available to users. In terms of trading volume, Binance is the largest crypto exchange in the world, and in accordance with the data revealed officially, Binance has the maximum number of customers and trading pairs. Along with providing common crypto exchange services, Binance also provides staking services to its customers. Hence, the user can stake his ETH tokens on Binance via the Binance Earn option. On staking the ETH tokens on Binance, the user acquires a BETH derivative token, which represents the Ethereum tokens staked on the network, in a ratio of 1:1. This token can be traded just like other tokens listed on the Binance crypto exchange platform, and it gives an annual return of 5.9%.
Decentralized Ethereum Staking platforms, as the name suggests, are DApps, and certainly, they do not have any central authority governing them. These platforms, unlike other platforms mentioned earlier in the article, are uniquely established for offering staking services to their registered users.
As we are now aware of the fact that these are decentralized entities, they are more secure and are managed through Decentralized Autonomous Organizations (DAOs).
The Rocketpool decentralized staking platform is currently in the stages of development and its testnet was introduced on August 2, 2021, and the mainnet will be launching soon. rETH, a derivative token to the Ethereum stakers, is provided by Rocketpool and the platform is solely managed and commanded by RPL. In terms of fees, Rocketpool charges 10.76% of the staking rewards as a service fee.
The platform is already included in the list of the best Ethereum staking platforms as it allows a user to stake their Ethereum and provides them with liquidity when the assets are staked on the Lido Finance staking platform. Staked ETH, or stETH, is what the user gets when he stakes his ETH on this platform, and it can be further used on various decentralized finance platforms for additional income. Dissimilar to the other Ethereum staking platforms, this platform is capable of providing lucidity to stETH Liquidity Pool on Curve and earn rewards. Moreover, if the user desires to enhance his yield, he will be able to deposit stETH on Yearn Finance and lend it to AAVE to earn interest on it.
Staking is considered to be the best option for creating a source of passive income through your crypto assets. However, the decentralized Ethereum staking platforms are really secure and rewarding, they are comparatively more difficult to use than the centralized Ethereum staking platforms for a beginner.
It is important to settle for the platforms that best suit your interests and offer a significant share of custody of funds, along with the additional advantages of Decentralized Finance apps to earn income.