Staking Ethereum 2 on KuCoin
There has been a lot of news recently about the launch of the Ethereum 2 beacon chain, also known as phase 0. Ethereum 2 is the long-awaited move to a proof of stake (PoS), rather than a proof of work (PoW), consensus mechanism. With PoS, Ethereum owners can choose to stake their coins and can gain a passive income from their stake.
Ethereum 2 aims to resolve a few issues:
- Sustainability - moving away from the energy hunger PoW consensus mechanism
- Security - there are new security features being built to protect against attack
- Scalability - the aim is to support thousands of transactions per second making it both faster and cheaper to use
There are a few phases in the journey to full Ethereum 2 implementation:
- Phase 0 - is the launch of the Beacon chain as a standalone PoS consensus chain
- Phase 1 - introduce data sharding anchored to the Beacon chain
- Phase 1.5 - is where Eth1 will get slotted into a single shard in the Beacon chain
- Phase 2 - is where other shards can execute transactions natively
Anyone can join now and be a part of the Ethereum 2 journey by staking your Ethereum. There a few things to note though. First, you need 32 Ethereum to activate the validator software, so unless you have this much Ethereum at hand, then you will need another option. Secondly, it comes with risk as you could lose some of your stake for malicious actions (like going offline or failing to validate). You will need to run your own Ethereum 1 main net client and so you need the appropriate hardware etc. So unless you have the money, appetite for risk and the technical knowledge, this isn't a good way forward for you.
KuCoin, like some other exchanges, are offering an alternative method to join in the action. They are supporting staking of Ethereum 2 by converting your existing Ethereum with a minimum of 0.01 Eth to participate. First, you need to do a 1:1 exchange of your Eth to Eth2. Note, this is a 1-way conversion and until Eth is fully merged into Eth2 Beacon chain, you will not be able to convert back. However, the rewards could be high. Kucoin estimate 5-20% APR as returns with some of the returns paid in POL.
POL is the (Proof of Liquidity) token that supports the KuCoin staking platform Pool-X. Pool-X allows you to get liquidity from your staked coins and you can transfer them to and from KuCoin for further trading or withdrawal.
So to get started, you can deposit some Ethereum to KuCoin, convert it to Eth2 and then stake it on Pool-x. The POL that you get from your staking you can trade on the exchange.
I am a believer of "not my keys, not my crypto". Hence, I wasn't willing to stake too much Eth2 and as stated above, it is not without risks. So, I have run an experiment for a week with staking 0.5927 Ethereum. This is what it looks like after staking for a week.
If you want to have a go yourself, below are my referral. I am happy to give anyone any further help as required. Of course, don't take anything I have said as financial advice - I am known to be mad - don't listen to me. Any mistakes in the above, are purely my own.