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You may earn between 3-7.5% reward on any ETH that you stake to help secure the network. ETH2 staking rewards are given in accordance to how much ETH is currently validating. Sounds like a good deal .. will it make eth more valuable than btc ? https://help.coinbase.com/en/coinbase/trading-and-funding/staking/ethereum-2-0-staking
Tax implications are a real headache. For 5% you can draw interest on your ETH and get paid in a stablecoin at BlockFi. Much better tax optimization because if you don’t have liquidity to cover taxes on ETH gained, you may need to sell ETH which then results in cap gains tax. Getting paid in a stablecoin allows you to immediately set aside those funds for taxes and push the remainder back into crypto if you feel like it.
How do you know how much of the stable coin to convert
You’re taxed on the income of the stablecoin, but there’s no gain to sell the stablecoin (because it’s stable). So think of it this way: - You have a bunch of ETH with a low cost basis - you deposit into BlockFi to draw interest in ETH - you are taxed on the income of ETH (and with rising eth price, this can be quite high) - tax season comes and you don’t have the cash liquidity to cover the taxes, so you have to liquidate that low cost basis ETH, resulting in capital gains taxes If you get paid in a stablecoin, you are only taxed on the income. You can then immediately sell the portion of stablecoin holdings to pay taxes.
I'd be careful with services such as Block Fi since there is a counterparty risk.
True. But counterparty risk applies to Coinbase ETH staking as well. Unless you’re running your own validator you’re going to have that risk.
As long as you understand that there is risk and willing to accept it, that's fine. I just wanted to ensure people understood that there is a risk.
Also, it would be interesting to see how the POS experiment works out...
Crypto?
nope
I'm running my own validators because I don't want them to take a cut.
That's awesome, are there sources you would recommend for someone that wants to learn ?
TLDR; follow the official guide https://ethereum.org/en/eth2/staking/ and then go to allnodes.com Whole process takes about two hours. Just make sure to safely store mnemonics and the validator keystore password. Don't know how big the validator queue is now. I had to wait 2 weeks The challenges are that bad actors can be slashed, it takes tech knowledge on keeping your validator online (or you will very slowly bleed ETH) and mainly your ETH will be locked untill phase 1.5.
What are the tax implications of blockfi interest vs coinbase staking ? I think in blockfi , you are lending your crypto and getting paid interest, while in coinbase, you will be on crypto as collateral to secure ETH 2.0. Which is better long term .?
I don’t really understand staking. What’s going on with it
+1. How do i stake and why would I want to
Also if you stake, can you get your coin out and liquidate it in minutes or is it locked up?