The crypto space has in recent times lured a great deal of attention from investors and traditional market traders such as forex traders. This attraction attributes to the immense financial gains investing in crypto offers. Ethereum, a worthy Bitcoin challenger, for example, rose in value by about 350 percent in the year 2020 alone.
Ethereum’s developers exploited Bitcoin’s shortcomings, like its scalability problem, to develop a more efficient digital currency that sought to seal the loopholes found in Bitcoin. Ethereum promised to be secure, scalable, and sustainable from its infancy days. Ethereum soon gained popularity, becoming the second-biggest digital currency after Bitcoin by market capitalization. In 2017, however, CryptoKitties led to congestion on the Ethereum network, causing a dwindling of transaction rates and high gas fees. This congestion necessitated the upgrade of Ethereum to Ethereum 2.0. The newly created Beacon Chain houses ETH 2.0, enabling the use of BETH Tokens during the Ethereum network upgrade.
What is BETH?
Simply put, BETH Token refers to staked ETH on Binance. BETH in Binance will enable Ethereum staking on Binance during the upgrade of the Ethereum to ETH 2.0. This upgrade will happen in 3 distinct phases, in a total of two years. During this upgrade, staked ETH on Binance will assume the form of BETH Token, which will become redeemable upon the completion of Ethereum network upgrade.
Why BETH?
Binance introduced BETH to counter the effects of Ethereum network upgrade, as discussed above. The introduction of BETH established a unique ability for users to transition between ETH and BETH upon Binance ETH staking. The main goal of this interphase is to allow users to use the staked ETH on Binance, ensuring no loss of coins even during the technical upgrade of the Ethereum network.
How Staking Ethereum on Binance Works
Binance came up with BETH in its consideration of its users who have ETH holdings or who trade them on the platform, for the two years Ethereum stipulates to update their network. This move will give room for Ethereum staking on Binance in exchange for the BETH Token. In this way, users involved in the Binance ETH staking will receive rewards as BETH Token.
The Ethereum network upgrade will occur in three phases, namely:
- Phase 0 entails the Beacon Chain launch, an independent chain off the base chain.
- Phase 1/1.5 entails the sharding of nodes into smaller components for the effective handling of systemic tasks.
- Phase 2.0 entails the launch of the eWASM language to replace EVM.
The upgrade specifications dictated that all the ETH become locked in before the upgrade initiates. Therefore, staking Ethereum on Binance becomes necessary for the ETH holders. Upon the staking, the ETH gets converted to an equal amount of BETH. BETH in Binance pegs to ETH on a 1:1 ratio. Thus, 1 unit of BETH equals 1 unit of ETH.
The BETH holdings, including staking rewards earned, will be redeemable back to ETH on a 1: 1 scale once the upgrade of the Ethereum network is complete.
The conversion of ETH to BETH enables users to continue using staked ETH on Binance as tradable digital assets before the two-year lock-in period elapses. Conversely, without BETH, the ETH locked-in on Binance during the Ethereum network upgrade would be hard to use.
How to use BETH
- Staking to Earn Rewards
Users can stake BETH on particular Binance Launchpool projects to earn new Tokens. The Binance spot exchange provides liquidity for these new Tokens.
- Providing liquidity to Earn Rewards
Users on Binance can provide liquidity to the ETH/BETH liquidity pool. Users who add both ETH and BETH to this pool get an incentive not to pay fees, unlike those who deposit only one of the two.
- BETH as a Yielding and Borrow-Lending Tool
Binance users can lock in BETH in money markets to earn a yield or as collateral to borrow different digital coins.
- Providing Liquidity to PancakeSwap
Binance users can deposit BETH on PancakeSwap to earn CAKE.
- Use on DeFi Apps
Binance users can withdraw BETH to the Binance Smart Chain (BSC) and use the token to access, operate and participate in the activities of DeFi apps.
Conclusion
Ethereum is undergoing the much-needed update that will increase its scalability, speed, sustainability, and efficiency. During this period, the ETH holders will still have access to the network native currency, ETH, through staking Ethereum on Binance.
The staked Ethereum on Binance converts to BETH Token, a transferable asset between peers on the Binance platform. BETH, thus, cascades the potential inoperable atmosphere created by the update of the Ethereum network and transforms it into one that thrives even with the upgrade in progress.
Visit mycryptoparadise for more educative crypto-related blog and news articles.
