Binance and Huobi exchange are part of a six-institution team selected by leading Ethereum developer, ConsenSys, to test the upcoming ETH 2.0 staking service. The testing period will allow the developers to find the best iterations to enable the institutions to successfully conduct staking on Ethereum’s upcoming upgrade.
ConsenSys launches testing for Codefi Staking
ConsenSys backed, Codefi Staking project announced the release of its first ETH 2.0 staking-as-a-service platform to six institutions including Binance, Crypto.com, Huobi Wallet, Trustology, MaxiPort, and DARMA Capital. This is the first release of its kind with the platforms expected to return feedback on several components during the testing phase.
ConsenSys developers, led by enterprise-focused, PegaSys, built the Codefi Staking platform coding in Java programming language using Teku.
Speaking on the launch of the test phase, Tim Lowe, the project manager of the Codefi staking platform, expects feedback on users’ responses on the payments of rewards on the amount staked in ETH or fiat fee, custodial services’ security protocols once the ETH 2.0 proof-of-stake (PoS) launches, and finally the ease of API integration on the platform.
‘Enterprise focused platform’
The Codefi Staking platform is focused on providing a powerful ETH 2.0 staking platform to blockchain-based enterprises such as exchanges, custodial services, hedge funds, etc. Lowe believes ETH 2.0 holds a lot of potential, given the current demand for such services. Lowe said,
“I think anybody who is holding any crypto assets and is aware of Ethereum generally is starting to look at Eth 2.0 and staking. It’s still early but the interest is there across the board.”
The pricing is yet to be set for the institutions waiting to use the platform as a SaaS, Time Lowe said. However, the price will not be their selling point, Lowe explained;
“From a staking point of view, we are not going to be the cheapest, but we’re also not going to be the most expensive.”
Is Custodial staking good for users?
Codefi’s platform focuses on exchanges and custodians but some sections of the community believe better options are available. Binance currently offers staking services for a number of PoS coins including Tezos, Algorand, and Cosmos without the need to own a whole node.
The Codefi staking service is only focused on Ethereum staking, Changpeng “CZ” Zhao, Binance founder said. He hopes to replicate the user-friendly features on its staking such as “low fee staking or minimum staking amounts” into Ethereum staking. Speaking on Codefi’s test phase CZ said,
“Users deserve the rewards that their coins can earn them. With the eventual launch of Ethereum 2.0, we are excited to support staking for all of our ETH holders on Binance.”
Exchanges and custodians offer users a direct gateway into staking while allowing the use of assets to trade and transact without affecting the staking rewards.
Mirko Schmiedl, founder and CEO of Staking Rewards, however, holds a negative view on leaving the exchanges to fully control your staking. In addition to not having control over the governance decisions, “it’s not possible to store a staked asset on Binance and then use it as collateral in BlockFi or Maker to take out a loan,” Mirko said.
This increases the centralization of power over certain blockchains to exchanges beating the purpose of PoS governance systems.
‘Codefi staking rewards to come in two years’
Codefi Staking will be integrated into Ethereum’s “intermediate phase” allowing users to earn staking rewards before the official launch of ETH 2.0.
As the Eth 2.0 is in preparation to launch, an intermediate phase (“ETH 1.5”) will be adopted to ease the transition from the Ethereum 1.x version as the PoS system cannot be directly compatible with the old proof of work system. This phase of moving from ETH 1.x to ETH 2.0 will take approximately two years.
The rewards gained during the intermediate phase will be accessible to the users only upon the launch of the Ethereum PoS network.
Author: Lujan Odera