Coinbase has notified its customers about upcoming changes to staked ETH rewards. The exchange has stated that it expects the rewards paid out for staking ETH to rise due to the move from the current proof of work mechanism to the proof of stake mechanism after the merge. As a result, Coinbase expects these rewards to double, according to the figures provided.
Coinbase stated, “Following the merge of Ethereum’s mainnet with the Beacon Chain expected around June of this year, we should see ETH staking yields increase as rewards will incorporate net transaction (ex-base) fees currently paid to miners. We estimate that staking yields could rise from around 4.3-5.4% APR to upwards of 9-12% APR.”
What is The Merge?
It’s important to remember that the Beacon Chain and Mainnet – the chain we use today – shipped separately at first. Even though the Ethereum Mainnet is still secured by proof-of-work, the Beacon Chain is secured by proof-of-stake. When these two systems merge, it’s known as the Merge.
After The Merge
This will mark the end of Ethereum’s proof-of-work era and the beginning of a more sustainable, environmentally friendly Ethereum. Ethereum will be one step closer to achieving the full scale, security, and long-term viability envisioned in its Ethereum vision at this point.
It’s worth noting that one of The Merge’s implementation goals is to make the transition from proof-of-work to proof-of-stake as simple as possible. Developers are concentrating their efforts on this transition and avoiding adding features that could cause the transition to be delayed.
As a result, some features, such as the ability to withdraw staked ETH, will have to wait until after The Merge is complete. A post-merge “cleanup” upgrade to address these features is planned, and it should happen soon after The Merge is completed.