With Ethereum’s second-generation blockchain launching on Dec 1, 2020, Coinbase is getting prepared. The exchange says it will allow for a smooth transition from ETH1 to ETH2 and will offer staking capabilities.
Cryptocurrency exchange giant Coinbase is already planning for the launch of Ethereum 2.0. Also known as ETH2, the new system for the world’s second biggest cryptocurrency will see its genesis block mined on Dec 1, 2020.
Ethereum: The Next Generation
This momentous event will only be the start of the first of many blockchains that will make up Ethereum 2.0. The current Ethereum will eventually migrate to the next generation.
There are several phases of ETH2, but testnets have successfully launched and over half a million ETH tokens have been stored away for staking.
ETH2 will work primarily with a PoS consensus algorithm. Stakers will need at least 32 ETH to stake. The entire process of transition from version 1 to 2 could take over a year.
In response, Coinbase has prepared its systems for this upgrade. A recent blogpost lays out the exchange’s plans for Ethereum 2.0.
ETH1 and ETH2 tokens will be distinct entities at first. Therefore, Coinbase is offering users the chance to convert. Users will also be able to stake their ETH via Coinbase.
It is not clear if Coinbase users will need any minimum amount of ether to stake.
Immediate ETH2 Liquidity?
For now, most staked ETH2 tokens (from that pool of half a million) will be locked on the “beacon” chain, which is the main blockchain of Eth2. Meanwhile, Coinbase claims to add liquidity for both ETH and ETH2, saying:
While staked ETH2 tokens remain locked on the beacon chain, Coinbase will also enable trading between ETH2, ETH, and all other supported currencies providing liquidity for our customers.
Though Coinbase says these features will be available “in eligible jurisdictions” sometime in 2021, the exact timeline remains unclear. Tokens currently staked in the ETH2 smart contract are likely to be locked until the end of that year.
The much-anticipated launch of ETH2 has been matched by a rise in Ethereum prices, which are currently hovering slightly above $600.
As the conversion process will take a long time, Coinbase is one of the first exchanges to mention, let alone promise, that it will support ETH2 staking. Coinbase’s blog post on the subject viewed the ETH2 launch as very positive news:
We’re excited for this major milestone for ETH2, and the potential that a final rollout of ETH2 holds for the entire cryptocurrency community.