Kraken is excited to announce that clients can stake their Ethereum (ETH) on Kraken to receive rewards of approximately 5% to 17%. The network reward is variable and 17% is currently the highest possible yearly yield.
ETH staking launches Friday December 4 at approximately 13:30 UTC.
Staking is enabled on the Ethereum network as part of the first phase of a major upgrade called Ethereum 2.0 that is expected to greatly improve the speed, scalability, security and efficiency of the network.
Benefits of staking ETH with Kraken
- Receive variable staking rewards of approximately 5% to 17% yearly, based on the network rate
- Receive rewards every week
- Stake small or large amounts – with Kraken you can stake less than the 32 ETH minimum required on the network
- Help support the upgrade to Ethereum 2.0
- Coming soon: Trade staked ETH for unstaked ETH (market will not be available for clients in the US and Canada)
Staking is primarily for long-term ETH holders
Clients should be aware that staked ETH cannot be unstaked, and along with staking rewards, cannot be transferred for an unknown period of time. This means that clients should only stake ETH that they plan to hold long-term. This limitation is not specific to Kraken – it is a limitation on the Ethereum network itself.
Coming soon: As a courtesy to clients who may wish to exchange their staked ETH for unstaked ETH, Kraken will provide a special trading pair for this purpose until the ability to unstake ETH is available on the Ethereum network. We expect to launch this trading pair in approximately one week.
Two important caveats about the market to exchange staked ETH for unstaked ETH:
- The market will NOT be available for users located in or residents or citizens of the US and Canada (these clients can stake ETH, but not trade their staked ETH for unstaked ETH)
- We offer no guarantees of any kind about the continued availability or liquidity of this market – price slippage in market orders should be expected and it may be difficult to exchange staked ETH for unstaked ETH in large amounts or at all, and this market may not be available for the duration of the Ethereum 2.0 transition
More about Ethereum 2.0 and staking
When the Ethereum 2.0 upgrade is complete, it is expected that the network will be able to process thousands of transactions per second, a huge leap forward in network speed.
There are two major technical elements in the upgrade. The first is a transition from a proof of work (POW) consensus model to proof of stake (POS). In the early stage of the transition, Ethereum will have both POW and POS chains.
The second element is the introduction of “shard chains,” which are an interconnected set of POS chains that will share the load of the network. Shard chains are somewhat like the blockchain version of parallel processing, or having multiple CPU cores in a computer.
The upgrade to Ethereum 2.0 is expected to proceed in four stages. The first stage of the upgrade, called “Phase 0,” introduces proof of stake to the network with a special chain called the Beacon Chain. The Beacon Chain will play an important managerial role in Ethereum 2.0, by coordinating stakers in the network and keeping shard chains secure and in sync.
Clients who stake ETH in Phase 0 are not only eligible to benefit from staking rewards, but also provide a valuable public service by helping to secure the Beacon Chain, which is the foundation for the later stages of the upgrade.
The original Ethereum 1.0 proof of work chain is expected to continue to exist and operate normally until the third phase, called “Phase 1.5,” when it is expected to transition to a proof of stake shard chain on Ethereum 2.0.
The ability to unstake ETH on the network is not expected to be available until Phase 1.5. It is unknown if or when exactly Phase 1.5 will launch.
Symbols and trading pairs
During the transition to Ethereum 2.0, Kraken will use different symbols to represent Ethereum tokens that have a different status on our platform and the network.
- ETH: The symbol “ETH” will represent tokens on the original Ethereum 1.0 chain. ETH will continue to be traded under our existing trading pairs and can be deposited or withdrawn as before.
- ETH2.S: The symbol “ETH2.S” will represent staked Ethereum tokens on Ethereum 2.0. ETH2.S cannot be deposited or withdrawn. ETH2.S can be traded for ETH, however this market will not be available for residents or citizens of the US and Canada.
- ETH2: The symbol “ETH2” will represent Ethereum tokens received as staking rewards on Ethereum 2.0. ETH2 cannot be deposited, withdrawn or traded.
Coming soon: Kraken will also offer a special trading pair during the transition to exchange ETH2.S for ETH (expected to launch in approximately one week).
Two important caveats about the ETH2.S/ETH trading pair (again):
- This pair is NOT be available for residents or citizens of the US and Canada (these clients can stake ETH, but not trade ETH2.S for ETH)
- We offer no guarantees of any kind about the continued availability or liquidity of this pair – price slippage in market orders should be expected and it may be difficult to exchange staked ETH for unstaked ETH in large amounts or at all, and this market may not be available for the duration of the Ethereum 2.0 transition
Note that ETH, ETH2.S and ETH2 are all tokens of the same asset and are only being distinguished because different tokens can have a different status during the transition to Ethereum 2.0.
Although ETH2.S and ETH represent the same asset, the ETH2.S/ETH trading pair will be an open market. ETH2.S may generally trade at a discount to ETH, since clients will have the alternative to directly stake their ETH to ETH2.S, at a 1:1 ratio.
How do I stake ETH to Ethereum 2.0?
- First you will need ETH in your Kraken account
- Navigate to “Staking” > Select Ethereum
- Read and agree to the disclaimer, then select “Stake”
When will my staking rewards begin?
The network has a limit on the number of new validators that can be accepted each day. Because of this, we estimate that it may take a week or more to start earning full rewards after you stake your ETH.
I’m not interested in staking my Ethereum tokens at this time – is there anything I need to do to prepare for Ethereum 2.0?
No – you do not need to do anything. You can continue to hold your ETH on Kraken or in a private wallet and deposit, withdraw and trade as normal. When Phase 1.5 launches, your ETH will transition over to the Ethereum 2.0 network.
What if the Ethereum 1.0 chain forks?
Any ETH tokens that you stake during the Ethereum 2.0 transition will no longer be accessible on the Ethereum 1.0 chain. This means that if the Ethereum 1.0 chain forks, you will not receive forked tokens for staked Ethereum tokens. If Kraken were to support this hypothetical fork, you would only receive the forked tokens corresponding to your ETH balance. You would not receive any forked tokens for your ETH2.S or ETH2 balance.