Binance liquid staking experienced a sudden inflow of $500 million over the weekend, pushing its total locked value to $1.2 billion. DefiLlama reported that a total of 318,180 wrapped Binance ETH (WBETH) derivative tokens were minted in five installments worth approximately $100 million each. These tokens were then sent to a crypto address labeled as “Binance 8,” a cold wallet where the exchange holds users’ assets.
Irregular Inflows Raise Questions
Earlier this month, Binance saw $573 million in inflows, prompting discussions among crypto observers about the irregular nature of the movements. While rival exchange Coinbase’s liquid staking derivative cbETH saw regular inflows and outflows every day over the past weeks, inflows to WBETH have been intermittent and taken place in large chunks.
Binance liquid staking clarified the situation in a social media post, explaining that the transactions were part of the exchange’s previously announced action to gradually convert the original Binance-issued staked ether (BETH) tokens to WBETH.
Introduction of WBETH
In April, Binance introduced an upgraded version of BETH called WBETH, a liquid staking derivative that allows investors to use the tokens for borrowing and lending on decentralized finance (DeFi) protocols outside of Binance while earning staking rewards.
The exchange announced a month ago several measures to boost the new token and curb activity with the old one, including “progressively” burning BETH tokens held in Binance wallets. Blockchain data shows that Binance burned 330,000 BETH on Monday, roughly similar to the amount of WBETH minted during the weekend, so the movements didn’t change substantially the overall amount of staked assets through the exchange.
Binance’s Position in Ethereum’s Staking Network
With 1.2 million ETH stakes, Binance is one of the largest players on Ethereum’s staking network behind Lido Finance and Coinbase, according to crypto investment firm 21Shares’ Dune dashboard. Now, WBETH represents about 765,000 of the staked assets, per data by DefiLlama.
Benefits of Binance Liquid Staking
Binance liquid staking offers several advantages to investors. The introduction of WBETH provides more flexibility for users, enabling them to participate in DeFi protocols outside of Binance while still earning staking rewards. This makes the staking process more attractive and accessible to a broader range of investors.
Furthermore, the gradual conversion of BETH tokens to WBETH ensures a smooth transition for users, minimizing disruptions to the staking process. The burning of BETH tokens held in Binance wallets also helps maintain the overall value of staked assets.
Conclusion
The sudden inflow of $500 million into Binance liquid staking over the weekend may have raised questions among crypto observers, but the exchange has provided a reasonable explanation for the irregular movements. The conversion of BETH tokens to WBETH is a strategic move aimed at boosting the new token and enhancing the staking experience for users. As one of the largest players on Ethereum’s staking network, Binance continues to innovate and improve its offerings to meet the evolving needs of the crypto community.
