TL;DR
BETH is a tokenized version of ETH staked on Binance. It's a simple way to participate in Beacon Chain ETH 2.0 staking. Through holding, you are entitled to rewards earned by Binance's ETH 2.0 staking node. But that is not all; you can also use it in several other ways on the Binance platform and the Binance Smart Chain (BSC).
Introduction
With the launch of the Beacon Chain in December 2020, the suite of upgrades (ETH 2.0) aimed at improving Ethereum's scalability is on track. As phase 0 of the implementation plan, it is now possible to stake ETH on this new blockchain. The BETH token allows you to participate in the ETH staking process without losing the flexibility of withdrawing 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 doesn't Ethereum work with the Proof of Work (PoW) mechanism? Yes for now. However, as part of the ETH 2.0 upgrade, the Ethereum network will fully migrate to the Proof of Stake (PoS) consensus mechanism.
Due to the complexity of the updates, implementation will occur in several steps. The first step was the launch of the so-called Beacon Chain, which will be the core of Eth2 once sharding is fully implemented. The Beacon Chain is now up and running and as of March 2021 it already had over 3.5 million ETH supporting the network.
The deposit contract for the Beacon Chain only works in a one-way manner. In other words, users can deposit, but will not be able to withdraw funds until the full launch of ETH 2.0 – which could take years. Additionally, you can only deposit in increments of 32 ETH.
The entire amount of ETH on the Beacon Chain is already yielding staking rewards. So, what do you do if you don't have 32 ETH, or want to maintain the flexibility to withdraw funds? You can join one of several ETH 2.0 staking pools. One of them is offered by Binance.
You can convert your ETH to BETH at a 1:1 ratio and start receiving BETH staking rewards. Great, but what if you still want to use your ETH elsewhere? Binance also offers the BETH/ETH pair on the Spot market, where you can convert BETH back to ETH.
How to use BETH
You can use the BETH token in several ways. One of them is to simply keep it on Binance and enjoy the staking rewards. You can also withdraw your BETH balance to the Binance Smart Chain (BSC) and use it in the DeFi sector. Let's take a look at the different options.
BETH no Binance Launchpool e Liquid Swap
If you keep your BETH balance on Binance, you can use it to receive additional rewards. For example, Launchpool projects sometimes use BETH as one of the coins available for deposits. You simply lock your BETH on Launchpool and earn a newly launched token that will get immediate liquidity from Binance's Spot exchange.
BETH no 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. Please note that you can add ETH, BETH or both to the liquidity pool - if you decide to add both, you will not pay any fees.
BETH for Lending Protocols
Another option is to deposit your BETH balance in a financial market like Venus and obtain income or use it as collateral (collateral) for borrowing other currencies.
BETH no PancakeSwap
You can also provide liquidity to the BETH/ETH pair on PancakeSwap and receive CAKE. Note that PancakeSwap works similarly to Uniswap, so to provide equivalent value of the two tokens, you will need the tokenized version of ETH on BSC.
One advantage of providing liquidity to this pool is that because BETH and ETH are priced the same or very similar, you will be less exposed to impermanent losses compared to other pools. If you don't know what this means, check out our impermanent loss article.
In short, this pool is less exposed to impermanent losses because the relative volatility between BETH and ETH is much lower than that of the ETH and BUSD pair, for example. In other words, ETH and BETH prices generally stay within a small range, so the effects of impermanent loss are reduced.
BETH on yield aggregators
Finally, it is also possible to use BETH in one of the yield aggregators on BSC. You deposit your BETH balance and the protocol automatically tries to find the best yield opportunities available. Beefy and Autofarm are two examples with support for BETH.
Is BETH worth more than ETH?
If you opt for the BETH/ETH market on Binance, you will see that BETH is not traded at a 1:1 ratio with ETH – although each BETH represents 1 ETH staked. Why that? Well, the short answer is: they are not the same asset. The pricing and variation between BETH and ETH completely depends on the market. Remember, BETH is a tokenized version of staked ETH.
Therefore, BETH has different characteristics from ETH. The fact that it is trading at a different price means that the market is pricing these qualities differently than ETH. Currently, it is not possible to redeem BETH for ETH. In other words, it offers less flexibility than ETH. But at the same time, it offers the holder staking rewards.
Final considerations
BETH is a tokenized version of ETH staked 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. Additionally, there are several ways to earn additional income using DeFi applications on the Binance Smart Chain.
