5 Things You Need to Know – Forbes Advisor – Technologist

The crypto-economy offers people across the world new ways to trade, earn and transact. Staking, or the “Proof-of-stake” mechanism, is one way that blockchain networks reward asset owners for helping verify blockchain transactions. Coinbase offers one of the safest and simplest ways for regular asset owners to earn staking rewards.

Staking is a new way to earn as you hold on to your eligible crypto. Essentially, blockchains reward crypto asset owners for helping with the seemingly mundane task of verifying transactions on their networks. Staking is employed by most major blockchains, including Ethereum, Polygon, Solana and almost all networks outside of Bitcoin. Since it can be technically complicated to do this on your own, Coinbase offers a simpler and more secure staking as a service that allows regular asset holders to stake their crypto. You can earn up to 10% APY depending on the asset.¹

Most crypto owners are not aware of staking or struggle with understanding how it works. Here are five things you need to know about staking, Coinbase’s service and how to get started.

1. Staking Is One of the Safest Ways to Earn in Crypto

There are many ways you can earn in crypto and they are not all equal. Staking is one of the safest ways to earn from the crypto-economy, because it is the lifeblood of blockchains. Proof-of-stake blockchains employ staking to verify routine transactions, like payments, NFT purchases, loans and more. Staking works similarly to a toll booth on a highway: When you stake, think of yourself as the toll booth operator. Instead of cars, though, you process transactions. In exchange, asset owners earn crypto from network rewards and transaction fees directly from the blockchain. Coinbase’s staking service is an important part of its mission to expand access to greater financial freedom being ushered in by crypto.

2. Coinbase Customers Can Start Earning in Seconds

Even though asset owners can stake their eligible assets directly, it can be technically complex to do so on your own. Compared to staking on your own, Coinbase has made it extremely simple for regular crypto owners to participate. Once you own assets that are eligible to stake, it’s as easy clicking “Stake now” and watching your rewards start rolling in. Coinbase currently offers staking on some of the most popular assets, including Ethereum, Polygon, Polkadot, Solana, Cosmos, Tezos, and Cardano. Coinbase takes care to simplify the process while also educating their users. In order to provide the service, Coinbase charges a small commission from rewards earned, which varies from asset to asset.



3. Your Staked Assets Are Never Loaned or Moved Out of Your Account

Blockhains payout staking rewards in the form of annual percentage yields (APYs). Since APYs are traditionally associated with earning fees for lending out funds, staking tends to be confused with lending. In reality, staking has no similarities with lending, apart from using the term APY. When users stake, their assets never leave their accounts but are rather pledged to participate in verifying transactions.

What this means is that while assets are staked, you cannot send or sell them. Coinbase makes it simple for you to unstake your asset.² When you request to unstake, it can take between a few minutes to a few weeks – depending on the blockchain–  to complete, during which time you cannot sell or send your assets. For those not frequently trading, staking could be an easy way to earn crypto instead of letting your assets sit idle.

4. Coinbase Employs Best-in-class Measures to Offer Secure Staking

Although rare, slashing – one risk associated with staking – is the possibility you could lose your staked assets. Coinbase has taken measures to reduce these risks. The team at Coinbase constantly monitors their systems and is ready to respond in case any nodes go offline. Coinbase diversifies and backs up its technical systems, so they are not reliant on a single point of failure. As a publicly traded, audited company, Coinbase is committed to compliance with both regulators and the rules of the networks on which it stakes. While no customers have lost any staked crypto by staking with Coinbase to date, there are still a few risks you should understand before staking (more information here).

5. How to Get Started on Coinbase

Staking on Coinbase is very simple to access. You can go to the “Earn” tab in the app, where you can stake any eligible assets you currently hold, or purchase eligible assets to stake. You can also stake directly from your asset wallet by clicking on the option to stake. It takes under a minute to start staking. You can also request to unstake assets at any time.²

To participate in staking, you must own a cryptocurrency that uses a Proof-of-Stake consensus mechanism for verifying and securing transactions. The following types of cryptocurrency assets are eligible for staking using Coinbase:

• Ethereum (ETH)
• Solana (SOL)
• Cardano (ADA)
• Polkadot (DOT)
• Polygon (MATIC)
• Tezos (XTZ)
• Cosmos (ATOM)
• Coinbase Staked Wrapped Ethereum (cbETH)

Coinbase staking is available in most regions globally. To learn more about the program visit the Earn webpage or this help article.

Staking is a core part of ensuring that the crypto economy functions for millions of users around the globe and is a win-win for blockchain networks and asset owners. Because staking is so fundamental to the crypto industry, Coinbase is committed to advancing access to staking for everyone, which means keeping it simple, safe and flexible.

¹The APY you receive depends on the rewards received from the network, which can change over time. Coinbase takes a commission on all rewards received, and the APY for our customers reflects this commission. Customers will be able to see the latest rate directly within their accounts.

²You can request to unstake anytime, but you will not be able to sell or send your staked assets until the unstaking process is complete. This could take from a few minutes to several weeks, depending on the asset. For more information, see the help center.

Information is provided for informational purposes only and is not investment advice. This is not a recommendation to buy or sell a particular digital asset or to employ a particular investment strategy. Coinbase makes no representation on the accuracy, suitability, or validity of any information provided or for a particular asset.