BETH, the token bridge for Ethereum 2.0 stakers

What is BETH (Ethereum 2.0)?

One of Binance's creations has been the BETH token, a curious token that allows creating a bridge between ETH 1.0 and ETH 2.0, in order to provide unique benefits to its holders. What is this token about? How does it work and how to get it? These are some of the questions that will be answered below:

The BETH token is the name given to the tokenized version of ETH that is staked within the Beacon Chain, hence its name, Beacon Ethereum (BETH). This token was created by Binance and works within the Binance Smart Chain (BSC, as BEP-20 token). The idea is that the token works as a bridge between ETH 1.0 and ETH 2.0, allowing people to introduce staking ETH to the ETH 2.0 network, and earn commissions that are later received as BETH tokens.

Thus, this bridge allows people to introduce ETH, and in case they wish to withdraw it, they can do so by means of BETH tokens, which are then transformed to ETH on the ETH 1.0 network. At this point you will ask yourself, why not make the withdrawal directly from ETH 2.0? The answer to this is; because it is not possible. The ETH 2.0 staking contract only works one way. That is, you can take ETH from 1.0 to 2.0, but you cannot do the reverse process. In other words, once you have ETH staking at 2.0, you will not be able to withdraw it until now when ETH 2.0 is not the main ETH network.

With this limitation, BETH solves the problem by creating a "reflection" of that ETH in staking on the side of ETH 1.0, thus being able to exchange, and greater flexibility when trading with staking within ETH 2.0.

How can I use BETH?

As we mentioned, BETH is a development of Binance so the best space to use it is this exchange. However, other exchanges also offer the possibility of using it as a bridge for their own pools.

The functionality of BETH is quite simple:

1. You enter Binance and by choosing to participate in ETH 2.0 staking, you prepare your ETH.
2. You make the deposit of ETH, and the system is responsible for sending it in batches of 32 ETH to the smart staking contract of the Beacon Chain.
3. For every ETH deposited you receive the same amount of BETH, blocked on behalf of your ETH in staking, and you start receiving rewards according to your level of participation in the pool.

The good thing about this system, as we mentioned, is that your participation in the pool generates the same rewards as ETH 2.0, but it does so on the side of ETH1.0, so if the staker wishes to withdraw his profits, he can do so. You can even use those earnings to inject liquidity into other projects (like Launchpool's) or Binance's Liquid Swaps, providing additional trading flexibility.

Another way to use BETH is on DeFi platforms such as Venus, where the token can be used as collateral to borrow or inject liquidity, making a profit from it. The same is repeated for example in the PanckaSwap pools, where the token can be used to receive rewards.

BETH and ETH Why the difference in value?

Now, at the beginning we mentioned that Binance development offers for each ETH in staking, 1 BETH. Does this mean that BETH is a 1: 1 pegged token with ETH? And if so , why is there a difference between the prices of both tokens? Before continuing, look at the following screenshots about the value of ETH and BETH. The price difference is quite marked, but this has a simple explanation: BETH and ETH are different tokens and there is no real 1: 1 relationship between them. We could even say that this difference is the price to pay for the possibilities offered by BETH. After all, if you made a staking deposit in real ETH 2.0, you would have to say goodbye to 32 ETH in that network, and that you have the possibility to do so, receive the rewards, and use those rewards in other spaces, it is something that few can offer you , with a small cost.

Additionally, there are also other factors that influence the price of BETH, among which we find:

1. Binance centralizes all that staking ETH in nodes that are its own.
2. Binance can unilaterally change the BETH relationship, which would lead to their devaluation. Although it has not happened, it is an additional risk and therefore the price is lower.
3. The token is limited to being used in BSC and that limits the possibilities of the token.

If anything, the BETH token is a great idea and the trust gained by Binance has paid off. Especially when maintaining a token of these characteristics with a price of such magnitude.

However, every day the launch of ETH 2.0 is getting closer and with it will come the end of this token. And although in the end it will have provided unique advantages to its holders, they will claim their ETH in the new Ethereum PoS. All this in order to continue using the second largest cryptocurrency in the crypto world.