TL;DR - SUMMARY
BETH is a tokenized version of Ethereum (ETH) staking on Binance. It's a simple way to participate in ETH 2.0 Beacon Chain staking. By holding, you are entitled to staking rewards generated by Binance on the ETH 2.0 staking node. But that is not all; You can also use it in various other ways on the Binance platform and Binance Smart Chain (BSC).
Introduction
With the launch of Beacon Chain in December 2020, the suite of upgrades (ETH 2.0) that aims to improve Ethereum's scalability is on the way. As part of phase 0 of the implementation plan, ETH can now be staked on this new chain. BETH allows you to easily participate in ETH staking without losing the flexibility to withdraw your ETH at any time.
What is BETH?
BETH is a tokenized version of staked ETH. Each BETH represents 1 ETH staked on Binance. But wait, doesn't Ethereum run on Proof of Work (PoW)? It does, for now. However, as part of ETH 2.0, Ethereum will completely switch to Proof of Stake (PoS).
Due to the complexity of the updates, this is implemented in several phases. The first step was to launch what is called Beacon Chain, which will be critical for Eth2 once sharding is fully implemented. The Beacon Chain is now up and running and, as of March 2021, has over 3.5 million ETH securing it.
The deposit contract for Beacon Chain works only one way. This means that users can deposit, but will not be able to withdraw until ETH 2.0 is fully launched, which may take years. Additionally, they can only deposit in increments of 32 ETH.
All that ETH on the Beacon Chain is already receiving staking rewards. So what do you do if you don't have 32 ETH or want to maintain the flexibility to make withdrawals? You can join one of the many ETH 2.0 staking pools. One of these is provided by Binance.
You can convert your ETH to BETH at a 1:1 ratio and start receiving staking rewards in BETH. Great, but what if you still want to use your ETH somewhere else? Binance also has a BETH/ETH spot market, where you can convert your BETH to ETH again.
How to use BETH
You can use BETH in several ways. One of them is to simply keep it on Binance and enjoy the staking rewards. You can also withdraw your BETH to Binance Smart Chain (BSC) and use it in DeFi applications. Let's take a look at the different options.
BETH en Binance Launchpool y Liquid Swap
If you keep your BETH on Binance, you can use it to earn additional rewards. For example, Launchpool projects sometimes use BETH as one of the coins available for deposits. You just have to lock your BETH in the Launchpool and earn a newly launched token that will get immediate liquidity from spot trading on the Binance Exchange.
BETH and Binance Liquid Swap
You can also use BETH on Binance Liquid Swap. For example, you can earn rewards by providing liquidity to the ETH/BETH liquidity pool. Note that you can add ETH, BETH, or both to the liquidity pool, but if you add both, you will not pay fees.
BETH in lending protocols
Another option is to deposit BETH into a money market like Venus and earn a return or use it as collateral to borrow other coins.
BETH and PancakeSwap
You can also provide liquidity to the BETH/ETH pair on PancakeSwap and receive CAKE. Please note that since PancakeSwap works similarly to Uniswap, you will also need the tokenized version of ETH on BSC to provide an equivalent value of the two tokens.
An advantage of providing liquidity to this pool is that since BETH and ETH are priced the same or very similar, you are less exposed to impermanent losses than in other pools. If you don't know what that means, read our article on impermanent loss.
In short, this reserve is less exposed to impermanent losses because the relative volatility between BETH and ETH is much lower than for something like ETH and BUSD. In other words, the price of ETH and BETH should generally remain in a small price range, so the effects of impermanent loss are slight.
BETH on yield aggregators
Lastly, you can also use BETH on one of the yield aggregators on BSC. Deposit your BETH and the protocol automatically tries to find the best return opportunities for you. Beefy and Autofarm are two examples that support BETH.
Is BETH worth more than ETH?
If you go to the BETH/ETH market on Binance, you will see that BETH does not trade at a 1:1 ratio to ETH, although each BETH represents 1 ETH staked. Why does that happen? Well, the short answer is that they are not the same asset. Price discovery between BETH and ETH depends entirely on the market. Remember, BETH is a tokenized version of staked ETH.
As such, BETH has different implications than ETH. The fact that it is being traded at a different price means that the market is pricing those qualities differently than ETH. BETH currently cannot be redeemed for ETH, meaning it has less flexibility than ETH. At the same time, it entitles holders to staking rewards.
In conclusion
BETH is a tokenized version of Ethereum (ETH) staking on Binance. You can earn ETH 2.0 staking rewards without having to worry about the technical requirements of setting up and maintaining an ETH 2.0 staking node. Aside from that, there are several ways to earn additional yield using DeFi applications on Binance Smart Chain.