Coinbase Adds Cardano Staking
Coinbase announced today that they will be expanding their staking portfolio. Neither this post nor any other on cryptofal.com should be taken as financial advice. It is not.
Cardano is on a tear for the last few days and this could be coming from the most recent announcement from Coinbase. Today, Coinbase announced it will be opening up the staking of the Cardano ADA token on its platform. This adds to their list of stakeable tokens that include Atom, Tezos, and ETH 2.0. Users will receive an estimated annual return of 3.75%.
Proof-of-Stake is the consensus mechanism that Ethereum is trying to move to. Instead of securing the network by mining, like with ETH and BTC, ADA is secured by people committing their holdings to the network. The more nodes on the network, the more points of failure there are. This makes it much harder for hackers to get through because they would have to go through every single computer on the network.
The exchange wants to continue adding to their staking portfolio giving users an easier way to make passive income. The process of staking can be annoying for a lot of people. This is where Coinbase comes in and does it for them. This is a good service but it does come at a cost.
If you were to stake ADA yourself on the Cardano Yori wallet you could make about 6% as opposed to Coinbases offer of 3.75%. On top of that, Coinbase takes 25% of the profits you make when you cash out your staking rewards. Let’s also not forget that you are going to have to pay taxes on those gains as well if you convert them into cash. This seems like a hefty fee especially if you are not expecting it before it happens.
This is a great idea because using Web3 applications is currently not ideal — even for advanced users. They are simply not user-friendly at the moment and Coinbase is very user-friendly. Staking is a great way to earn a passive income, but doing it through a centralized exchange may not net you as much as you should really be getting. They are taking 2.25% off the top and keeping it for themselves and then charging you the 25% commission for their service. This is a step towards further adoption and letting people know what staking is but it seems that they are taking advantage of their users at the same time.
