What’s The Point Of Staking For ETH 2.0 Anymore?
There are better opportunities elsewhere, which makes me think ETH 2.0 was never a good investment for retail investors.
I’m not exaggerating when I say that one of my biggest mistakes as a “crypto-newbie” was staking my ETH on Binance for ETH 2.0.
When I first became a crypto-enthusiast, I decided very early on that I was going to be a HODLer. It made sense, therefore, that I would look for various ways to maximize the returns on my investments. This, naturally, meant I started staking my coins.
Binance, at the time, advertised “up to 21.60% APY” on any staked ETH for ETH 2.0.
In return for your staked ETH, you would get BETH, which you will be able to exchange 1:1 for ETH once the ETH 2.0 merge happens. In the meantime, your BETH accrues interest, growing your investment.
Should you wish to exit early, you may, but the only catch is that you will have to trade your BETH for ETH on the “open market” and typically lose 4-8% of your investment.
Piece of Advice #1: Always Read The Fineprint
But This Didn’t Turn Out To Be The Only Catch (Obviously)
For starters, I never actually received anywhere near 21.60% APY.
I tried calculating it once and it worked out to be no more than 4.5% APY (maybe 5.0% if you take compounding into account). This was clearly a bit of “creative marketing” and is similar to how CDC advertises that customers who use its Supercharger “Launchpool” can earn “up to 30-60% APY.”
In reality, virtually no one earns more than 3-5%.
On a side note, you’re better off avoiding CDC’s Supercharger altogether. It’s a silly waste of your resources that functions more as a lottery than an investment. Instead, you can stake your CRO through DeFi or through the CDC Card for 10-12%.
If you want, you can later buy those samecoins promoted via the Supercharger event with the income generated from the staked CRO. You’ll get far more coins that way.
For what it’s worth, Binance did eventually adjust the advertised APY to more accurately reflect the real interest earned via ETH 2.0 Staking. CDC hasn’t taken any steps to do the same with its “grossly” misleading Supercharger events.
“God Bless CDC’s Marketing Dept”
But I digress, can someone tell me the point of staking ETH for ETH 2.0 for 4-5% APY (and committing until God knows when) when you can earn the following on ETH:
6% APY on ETH with Celsius (Referral Link) / (Plain Link)
5% APY on ETH with AQRU (Plain Link)
11% APY on ETH with MIDAS (Referral Link) / (Plain Link)
All platforms mentioned above provide interest on ETH deposits with daily payouts and without locked staking terms; providing you with all the flexibility in the world.
At this point, ETH 2.0 seems to have been a poor investment choice, especially when you consider the other opportunities available.
This makes me think ETH 2.0 was never really intended for regular retail investors, but for institutional investors and developers who were deeply invested in the Ethereum ecosystem and stood to financially benefit in other ways from the merge.
In other words, the 4-5% APY earned from staking their ETH for ETH 2.0 isn’t the actual reward they’re waiting for — but a nice incentive to keep you going.
This is probably why you need a minimum of 32 ETH to stake with Ethereum directly. Not because Vitalik Buterin doesn’t care about ordinary crypto investors, but because these investors are unlikely to financially benefit from the value ETH 2.0 will add to the ecosystem.
This makes me wonder, whether Binance should have offered this “opportunity” to retail investors in the first place — without ever clarifying the fine details.
In the end, I decided to take the ~6% loss and sold my BETH for ETH on Binance’s open market and staked it all on Midas at 18% APY. I’ll eventually make that loss back, so I’m not too upset I guess. We all need to learn somehow.
To learn more about Midas, you can read my review of the platform on Substack.
Reader’s Note
If you’re still interested to stake ETH for ETH 2.0 on Binance, I recommend you don’t do it through the “Staking/Earn” portal on Binance. You should instead buy your BETH directly through spot trading, similar to how you would buy any other coin.
If you decide to stick it out until the merge, this “smart hack” will eventually yield you 4-8% more ETH for your money while earning you the exact same interest if you had gone through the Binance staking portal and purchased through there.
If you don’t stick out, you can still sell your BETH back for ETH, but at least then you will have avoided the 4-8% penalty/loss due to your earlier gain.
Again, this isn’t something Binance advertises — anywhere.
As Always,
Invest In Tomorrow.