Centralized Ethereum Staking Platforms

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5 Best Ethereum Staking Platforms – (Comparison Table)

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Ethereum is currently the most used blockchain network in the world. The reason for this use case is the smart-contract-based applications called Decentralized Applications or DApps.

More than 2800 DApps are built on Ethereum, which accounts for more than 80% of total DApps globally. But, due to this enormous success and adoption, Ethereum is having a problem with scalability.

The network currently operates on the Proof of Work (PoW) consensus mechanism, due to which the current Transaction Per Second (TPS) is between 15-20 transactions. This TPS is significantly less for a network that has been adopted on such a large scale. Further, the transaction cost or the gas fee on the network is so high that it has become a bottleneck for the network’s further adoption.

Therefore, the Ethereum network is scheduled for its most significant update called Ethereum 2.0, which would shift the consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS). To know more about Proof of Work, Proof of Stake, and Staking, read our Staking Guide Here.

The upgrade would increase the TPS up to 100,000 transactions and reduce the transaction cost by 90-95%. Although the final merge of the main network with the PoS network is still pending, Ethereum 2.0 Beacon Chain was launched in December 2020. ETH Holders (Ether or ETH is the native token of Ethereum Network) can currently stake their ETH tokens on the Beacon Chain to earn staking rewards.

The most direct method of staking your ETH on the Ethereum network is becoming a Node Operator.

However, this method has its limitations, such as:

You need to deposit 32 ETH or more to run a node on the network,

You should have the technical, operational knowledge to run a node,

You should have operational hardware to run a node,

You cannot unstake ETH until the final ETH 2.0 merge is completed.

The next best alternative is to use a staking service that lets you stake your ETH simply and efficiently. Therefore, we have collated a list of the best staking platforms for your ETH tokens.

Name of the Platform Type Fee for Ethereum Staking Coinbase Centralized Variable Kraken Centralized Variable Binance Centralized 0% Lido Finance Decentralized 10% Rocketpool Decentralized 10.76%

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Mainly there are two types of staking platforms, Centralized and Decentralized. So, let us first understand the Centralized Staking Platforms.

Centralized Staking Platforms

Centralized staking platforms such as centralized crypto exchanges are the most used platforms for staking. The reason for this is the high existing user base of the platform and the user-friendly process of staking.

These platforms have their node operators who stake users’ funds on behalf of them. The node operators collect staking rewards, and exchange distributes them to the users after deducting their commission.

Now, let us understand the benefits and limitations of centralized staking platforms:

Pros and Cons of Centralized Staking Platforms

Pros Cons These platforms are easy to use These platforms keep the custody of users’ funds There is no or very low minimum deposit limit of crypto. This means that even small investors can stake their assets. Service fee is generally higher than the decentralized platforms. There is no need to run a node on the network. If a node operator misbehaves on the network, then slashing penalties will be imposed by the network on the operator, which will be passed on to the users who have staked their assets.

Now, let us know the best-centralized staking platforms available in the market.

  1. Coinbase

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Coinbase is the biggest exchange in the United States based on trading volumes. Although the exchange is available globally, its userbase is more concentrated in the states. Read the detailed review of Coinbase here.

In addition, with the standard exchange services, the exchange also offers staking services to its users. An ETH holder on the exchange can stake their assets through the platform and earn an expected APR of 5%.

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However, actual staking rewards may vary, and Coinbase would take its commission from the gross staking rewards. The exact rate of commission for ETH staking is not clear in the Coinbase User Agreement.

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The next alternative staking platform is the Kraken Exchange.

  1. Kraken
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Kraken is one of the top crypto exchanges in the world based on trading volume. Along with essential exchange services, Kraken also provides staking services.
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The staking rewards are expected to be between 5-7% per annum after the commission, which is variable.

Once you stake your ETH tokens on the exchange, you would receive an ETH2.S token, a derivative token representing Ethereum tokens being staked. Now, this token can be traded on the exchange as a standard crypto token. Further, you would receive an ETH2 token, a derivative token to represent your staking rewards.

  1. Binance
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Binance is the world’s no.1 crypto exchange based on the trading volume. Globally it has the maximum number of users and trading pairs.

In addition to exchange services, Binance also provides staking services, which we have mentioned earlier in our guide on best proof of stake cryptos. ETH tokens can be staked on Binance through the Binance Earn option.

Once you stake your ETH tokens on Binance, you would receive a BETH derivative token in a 1:1 ratio. BETH represents the ETH tokens staked on the network. Further, BETH can be traded on Binance as any standard crypto token.

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The current APY for Ethereum Staking on Binance is 5.9%.

Now, let us understand the Decentralized Staking Platforms in another blog post.

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