Ethereum (ETH) staking guide on Coinbase Prime

• Validator types that you can use to stake asset on Coinbase Prime:

  • Coinbase default dedicated validator: Yes

• Delegation minimum requirement: 32 ETH

• Staking maximum: Up to 2048 ETH (based on target validator size)

• Estimated rewards rate: Rewards rates vary - visit https://www.stakingrewards.com/cryptoassets* for current estimated reward rates.

• Estimated reward payout:

  • Consensus Layer rewards (or Validator rewards):

    • Consensus Layer rewards accrue every epoch as Pending Rewards. For pre-Pectra 0x01 validators, these rewards do not auto-compound and get automatically distributed by the Ethereum network to the staked wallet (= withdrawal address). For Pectra-enabed 0x02 validators, these rewards autocompound (in increments of 1 ETH, see FAQs). Users can access these with a claim rewards request in Prime.

  • Execution Layer Rewards (Transaction rewards + MEV) are distributed when a validator processes a transaction and are not distributed in a specified time frame.

    • Execution Layer Rewards are deposited into a designated ETH Transaction Reward Wallet, identifiable by the name "Staking Transaction Rewards"

      • All Execution Layer rewards collected in a portfolio are distributed into this wallet.

      • Users are not able to deposit funds into that Staking Transaction Rewards wallet.

*Third-party website provided for information only. Coinbase hasn't verified and doesn't guarantee the accuracy of information, including minimum requirements, staking maximums, and reward rates, provided on www.stakingrewards.com

To claim accrued ETH rewards, please follow these steps within the Prime UI:

1. Select the three vertical dots on the right hand side of the ETH staked wallet to view the “Claim Rewards” option. Select “Claim Rewards” which will open a new page.

2. On the “Claim Rewards” page, input the amount of accrued rewards you would like to claim.

3. Next, click “Continue” in the bottom right hand corner of this screen and confirm your claim on the next page. This action will require you to verify your identity with your Yubikey and reach consensus prior to being processed.

4. Once the transaction has been completed and the rewards have been claimed, the amount will be displayed as withdrawable in the same staked wallet.

Bonding and unbonding periods are dependent on network conditions. See the latest here.

Ability to stake when using the following entity:

• Coinbase Custody Trust Company, LLC: Yes

• Coinbase Germany GmBH: Yes

• Coinbase Luxembourg: Yes

• Coinbase, Inc. (Custodial Account only): Yes

• Staking: For pre-Pectra validators (0x01), staking is limited to multiples of 32 ETH from a vault wallet up to 3,200 ETH. Any remaining balance that does not meet this requirement will not be staked. In contrast, Pectra-enabled validators (0x02) allow staking amounts ranging from 32 ETH to 180,000 ETH per vault wallet, eliminating the need to stake in multiples of 32 ETH.

• Ability to unstake assets: For pre-Pectra validators (0x01, you can unstake in exact multiples of 32 ETH. The remaining staked balance will continue to be staked. For Pectra-enabled validators (0x02), you can stake any amount >= 32 ETH and unstake any amount >= 1 ETH.

• Ability to change staking amounts: Yes, you can incrementally stake or unstake in multiples of 32 ETH for pre-Pectra validators and any amount for Pectra-enabled as long as 32 ETH remains staked.

ETH staking fees are based on both distributed rewards and pending rewards.

1. Distributed Rewards: ETH reward amount distributed at a given time multiplied by the current price of ETH in USD and the staking fee percentage.

2. Pending Rewards: Change in pending ETH rewards between the start and end of the day (UTC) multiplied by the price of ETH in USD at midnight UTC and the staking fee percentage.

The total fee is the sum of the USD value of all distributed ETH rewards and the USD value of daily change in pending rewards, both multiplied by the staking fee rate. When pending rewards are distributed, the distributed amount increases and the pending amount decreases to avoid double-counting. This methodology accommodates ETH staked to both pre-Pectra 0x01 validators and Pectra-enabled 0x02 validators.

1. Sign in to Coinbase Prime.

2. From the portfolio tab, search for the asset.

3. Click the asset to open the asset page. 

4. Under Vault Balance, click the … ellipses icon next to the wallet you’d like to use.

5. Select Unstake.

6. On the unstake page, please select an amount (in $ or ETH)  to unstake

   • Wallets staking to pre-Pectra 0x01 validators can be partially unstaked in multiples of 32 ETH

   • Pectra-enabled wallets staking to 0x02 validators can unstake any amount >= 1 ETH 

   • The remainder of the staked balance will remain staked. 

   • Note: You can request multiple unstaking transactions at a time.

7. After reviewing the information in the pop-up window, click Unstake.

8. Verify your identity with YubiKey.

9. This action requires additional consensus approvals. 

10. After consensus is reached, each asset is subject to an unbonding period. You can withdraw the asset after it’s unbonded.

1. Sign in to Coinbase Prime.

2. Click on the Stake tab in the left-hand menu.

3. Search for and click on the asset to open the asset page.

4. Click on Stake.

5. Participate in traditional staking.

6. Select a Vault wallet to stake.

   • Note: You must have a Vault wallet (cold wallet) set up and deposit funds prior to staking.

   • You can stake any amount >= 32 ETH

7. On the wallet selection page, below the Selected Wallet option, select the amount you want to stake in ETH or click on USE MAX (see value in $).

8. After reviewing the information, click on Stake.

9. Verify the transaction using the YubiKey.

10. After consensus is reached, each asset is subject to a bonding period (dependent on network conditions)

Consensus requirements: General consensus approvals required for all staking activities

What is the US tax treatment for ETH staking?

When you receive your liquid rewards in your Coinbase Prime account, Coinbase will consider rewards earned from staking ETH as taxable income and subject to any required tax information reporting. Subject to future guidance from the IRS, ETH staking rewards are considered income, just like any other kind of staking rewards.

Rewards: Both ETH staking transaction and validator rewards will be considered income when they are received, using the market price of ETH as of the date they are received. 

Tax treatment for ETH staking outside of the US may differ based on your jurisdiction and regulations; please contact a qualified tax accountant for more information.