Update on Ethereum 2.0 Staking Rewards

Last month Kraken launched its Ethereum 2.0 staking service, which makes it easy for ETH holders to earn rewards of approximately 5% or more and help support the upgrade to Ethereum 2.0. 

Staking is an opportunity that is only appropriate for clients who want to hold their ETH long-term, because staked ETH cannot be unstaked and, along with staking rewards, cannot be transferred for an unknown period of time (because it is uncertain when exactly transfers will be enabled on the Ethereum 2.0 network).

The launch has been a huge success, with clients already staking more than 350,000 ETH through Kraken.

Due to the extreme popularity of Ethereum 2.0 staking, not only on Kraken but across the entire network, it currently takes about 3 weeks for a new validator to go live on the network and start earning rewards (the Ethereum 2.0 protocol limits the number of new validators to 900 per day). This means that newly staked ETH currently does not start earning rewards for approximately 3 weeks. 

When we first launched our staking service, we allowed newly staked ETH to share the rewards, even if the validators behind that new ETH hadn’t come online yet. While this meant that new stakers could start earning rewards more quickly, it also meant that old stakers were earning a lower reward. 

To make the staking rewards on Kraken better aligned with the network rate, we are introducing a bonding period for newly staked ETH. This means that when you stake new ETH with Kraken, there will be a waiting period before you start earning rewards. After the waiting period, however, you will get a higher reward because you won’t be sharing the reward with new stakers. 

Note that this waiting period is not unique to Kraken. The long delay in adding validators is an issue across the entire network. So even if you stake ETH yourself directly on the network, you will still have to wait before earning rewards.

How long is the bonding period?

To start, the bonding period will…

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