The United States subsidiary of cryptocurrency exchange Binance made the announcement on Wednesday that it will launch an Ethereum (ETH) staking programme with yearly percentage rewards of up to 6.0%. Under the new service that Binance US has implemented, direct staking on the Ethereum network would only need 0.001 ETH rather than the 32 ETH that would be necessary under the previous system.
The staking yields are somewhat augmented by features such as Binance US’ automated restake, which permits the compounding of returns, and thus contributes to the overall growth of the cryptocurrency. Nevertheless, users are unable to unstake ETH at this time, and awards will not be given until Ethereum first makes the move from a proof-of-work blockchain to a proof-of-stake blockchain through the forthcoming Merge update, which is slated to take place on September 15. After that, users will be able to withdraw their staked ETH via a future “Shanghai Upgrade,” the fulfilment of which is reliant to a successful completion of the Merge.
There is no assurance that the update will have a seamless transition because of the complex nature of the upgrade itself. Because of this, the users’ money are susceptible to risks such as a delayed return of funds or a loss of capital in the event that the upgrade is unsuccessful.
Binance US asserts that it does not have any influence on the process by which investors may recover their staked ETH or the total amount that can be recovered. At the time of publishing, there were still 21.6% of Ethereum nodes that had not yet upgraded to The Merge.