ETH2.0 Staking is the most omnichannel sorting out, which one is best for you? Until ETH 2.0 is officially launched, less than 90% of the progress bar remains. With the launch of the Ethereum 2.0 storage contract, the POS mechanism of Ethereum 2.0 has been slowly opened, although it is officially available, it will take 2-3 years to wait. It takes 524,000 ETH to be deposited in the storage contract to start the Ethereum 2.0 network. If all goes well, in another half month, Ethereum 2.0 will usher in a milestone event: the creation of the beacon chain. After meeting the needs of the block height and the number of pledged assets, the Ethereum community can declare: Ethereum 2.0 is late but is coming.
According to the statistics on the chain, the current deposit amount is 60,100 Ethereum.
1. How can ordinary users benefit?
After Ethereum 2.0 goes online, what opportunities do ordinary people have to participate? The main way to play is to share the revenue of the network through mortgage tokens. But to make it clear, we must first briefly understand the changes in the Ethereum 2.0 network. From PoW to PoS: changes in the Ethereum token mechanism
Ethereum 2.0 uses the PoS mechanism to replace the 1.0 stage PoW algorithm.
Under the PoW mechanism, what is fighting for is the computing power of the machine, and miners can participate in it without collateralizing Ether, and gain income with computing power and luck. There are fewer ways and channels for ordinary people to participate.
After Ethereum 2.0 was launched, the PoS consensus algorithm was adopted. At this stage, the Ethereum network will reward block producers, and node participants, in addition to turning on the computer and operating stably, also need to mortgage a certain amount of assets to become validators. In addition, if the nodes running in the Ethereum 2.0 network are abnormal or maliciously operated, the mortgaged assets will also be punished and confiscated, which encourages node verifiers to maintain the same interests as the Ethereum network.
The PoS mechanism brings additional opportunities: mortgage ETH and share the system rewards of the Ethereum PoS network. Use the more familiar DeFi analogy: Ethereum 2.0 adds native coin deposit mining rewards, but the premise is to become a validator node to share this part of the income.
How to divide the money? This has always been a big problem and a big opportunity. Don’t underestimate the requirements of Ethereum 2.0’s newly added collateral assets. From this comes a new revenue track: the Ethereum 2.0 Staking industry .
2. Ordinary users are not recommended to build nodes
Why is it not recommended for ordinary people to build their own nodes? Whether it is Ethereum 1.0 or the upcoming Ethereum 2.0, validators need to run nodes and maintain good machine performance.
For ordinary token holders who are not hardcore players, the best way to participate in Ethereum 2.0 Staking must not be to run the node by themselves, otherwise they will encounter a series of difficulties.
The first is the technical threshold and hardware requirements for running nodes . It is not only necessary to purchase well-configured machines to maintain operational performance, but also a series of operation and maintenance tools to ensure that the verification nodes are not abnormal. Although the penalty standard of Ethereum 2.0 is relatively low at this stage, ordinary participants have neither the willingness nor the ability to face this part of the trouble/risk.
The second is the funding threshold, where 32 Ethereum can be pledged to become a validator. In addition, this part of the tokens will continue to be locked, and together with the potential benefits obtained, it will not be unfrozen until the second phase (or 1.5 phase) of Ethereum. Calculated based on the current value of 3,000 yuan, and 100,000 yuan is locked for 2 years, this threshold must be something ordinary currency holders do not want to face.
Self-built nodes to become validators, although very attractive to a few hardcore players, it is obvious to you and me that there is a need for a better way.
3. What kind of third-party services are there?
Participating in Ethereum staking will have a generous yield, which will attract a large number of coin holders to participate. When the entire network reaches 520,000 ETH pledges, the annualized rate of return of pledges is about 21.6%. Even if the pledge amount of the entire network reaches 10 million ETH, the annualized return is still around 5%. Different from the high income of DeFi projects, this part of the Ethereum pledge income comes from the Ethereum network itself, which can be regarded as a considerable profit for the holders.
As mentioned earlier, running node mining on your own is not only time-consuming and labor-intensive, but also requires technology and capital. Therefore, choosing a third-party service provider for staking will become a more common choice . We can roughly divide it into three categories:
- Centralized exchanges and mining pools. The entry barrier is low, and there is no need to run the node by yourself, and part of the income will become the service fee.
- Decentralized wallets and service providers. Through smart contracts, coin deposit and mining are realized. As for the node operation, leave it to the service provider to handle it.
- Platform side. Regardless of the above method, someone will eventually need to run the node. Therefore, some projects have dived into a layer and acted as the underlying infrastructure of various mortgage service providers, responsible for operating the node and obtaining fee income.
Next, let’s take a look at which projects plan to join in to pledge services for ordinary currency holders. Over time, more service parties will appear, and Ethereum 2.0 Staking will become the standard configuration of exchanges and wallets. So this list is destined to be incomplete, but the gameplay is expected to be similar. Even if you see this at some point in the future, I hope to give you some inspiration.
Fourth, centralized trading
Although there are various doubts about centralized exchanges, centralized exchanges are easy to operate and are still the best choice for ordinary currency holders.
A few months ago, at an industry conference on the subject of Staking 2.0 , major centralized exchanges such as Binance, Huobi, OKEX, etc. all indicated that they planned to deploy Ethereum 2.0 Staking-related services . Today I communicated with friends from the old exchange AEX and mentioned that they will plan more interesting services related to Ethereum 2.0 Staking for users to use.
In addition, Coinbase, the largest compliant asset exchange in the United States, announced the transition to a global staking service at the end of last year , making staking the most critical investment strategy in the blockchain ecosystem. At the time when Ethereum 2.0, the largest PoS ecosystem, is about to start, I believe we will see the news of CoinBase soon.
It can be expected that in the next one or two months, many exchanges will continue to announce the opening of the Ethereum 2.0 mining pool. Currently, there are not many that can provide a clear launch date, and CoinDCX is an example of it.
It is reported that CoinDCX, India’s largest cryptocurrency exchange, is ready for Ethereum 2.0 pledge, with a participation threshold of 0.1 ETH. CoinDCX will create validator nodes with the collected Ethereum funds, and in return, will extract part of the handling fees to cover hardware and infrastructure costs.
Ethereum 2.0 staking will bring an additional problem: because the process of transferring from Ethereum to the deposit contract and converting to Ethereum 2.0 tokens is one-way, and it is expected that the tokens deposited within two years will be locked Therefore, how to activate the liquidity of locked funds requires appropriate solutions.
In addition to self-built node groups to meet user mortgage needs, it can also be achieved with the help of third-party infrastructure providers. LiquidStake described below takes this approach.
5. Institutional LiquidStake
LiquidStake: Ethereum Staking service that both individuals and institutions can participate in.
With the launch of Ethereum 2.0, an interesting question is: how can institutional holders participate . Although this article mainly focuses on the gameplay of retail investors/ordinary token holders, the LiquidStake project makes me want to mention more about the role of institutional holders. According to reports, DARMA Capital, an active participant in the Ethereum ecosystem and an encrypted asset investment company, has launched the LiquidStake project to support Ethereum holders to pledge mining .
Specifically, LiquidStake allows individuals and institutions to deposit assets. The project did not create additional tokens. In order to solve the liquidity problem, deposit users can borrow USDC with the deposited ETH as collateral, and the project party will charge a borrowing fee and part of the mortgage income. Individuals can deposit any amount of ETH tokens, and institutional investors can participate in it by signing an exchange agreement.
LiquidStake will collect the customer’s ETH and send it to service providers such as Bison Trails, ConsenSys Codefi or Figment Networks, who will provide the infrastructure to serve the Ethereum network as a validator node. LiquidStake has not yet been launched and is still in the testing phase.
Address: https://liquidstake.com/
Next, let’s take a look at several major third-party service providers, such as StaFi, ANKR, Rocket Protocol, Blox, etc., to see how they provide Ethereum 2.0 Staking services.
6. Platform StaFi
StaFi is a decentralized protocol that provides liquidity for staking assets, which of course will also include the tokens pledged in the Ethereum 2.0 network.
The solution proposed by StaFi is: users deposit the contract to participate in the pledge, without running the node client, they can get the ERC20 token rETH issued by the platform, anchor the user’s principal and the corresponding income. rETH has no transfer restrictions, and it can also participate in applications such as DeFi’s loan agreement.
Specifically, users can pledge at least 0.01 ETH, and StaFi deploys smart contracts on the ETH PoW chain to achieve a decentralized approach. According to StaFi’s introduction:
User staking-related contracts are mainly deployed on Ethereum, but solutions for user fund security, especially key management, will be implemented by validators on the StaFi chain using MPC and multi-signature. On the other hand, ETH 2.0 pledge is inseparable from validator nodes. StaFi’s approach is to achieve through Original Validators. Original Validator refers to the ETH 2.0 validator who joined the StaFi ETH2.0 Staking Contract program. StaFi provides tools to the validator node operator. After the team registers and pays the deposit, it can become the Original Validator. The verification fee payment is to ensure that the node will not affect the user’s funds when it encounters a penalty, and it is borne by the deposit paid by the node party.
The income of the validator node comes from the commission received from the service. But in fact, for a long time, this part of the income cannot be seen. In order to alleviate the liquidity problem, the solution provided by StaFi is to provide liquidity by the official, as shown in the figure below.
Compared with other staking solutions, the advantage of StaFi is that it provides a decentralized way to ensure the security of pledged assets through multi-signatures and other means. At present, the launch date of StaFi’s ETH2.0 liquidity plan has not yet been determined, but we will pay close attention.
Address: https://www.stafi.io/
Seven, platform type Stkr
- Ankr: Provide ANKR airdrop rewards and encourage users to use the mobile betting platform Stkr.
- Ankr’s current main business can be divided into two parts: providing node services. Currently, it supports more than 50 protocols and has deployed thousands of nodes. Provides infrastructure for Ethereum 2.0 mortgage services.
- Ankr also created the stkr platform, a decentralized liquidity pledge agreement, which is deeply customized for Ethereum 2.0, providing users with distributed mortgages and services for mining pools.
The Stkr platform is currently online, and users can already deposit ETH through Stkr. There are currently no other platforms available on the market.
Currently, the ETH deposited by the user to Stkr will be stored in the smart contract for one week. It is expected that after a week, the contract review can end. Before that, the ETH deposited by the user can be accessed; after that, the ETH in the Stkr contract will be sent to the 2.0 contract. Since the Ethereum deposit agreement is a one-way method after depositing, it means that the pledger will not be able to withdraw ETH.
As we mentioned earlier, the liquidity of locked tokens is something that every project party needs to pay attention to. How does Ankr solve the liquidity problem?
With the ETH deposited through the Stkr platform, users will get the corresponding interest-bearing certificate aETH, and users can transfer or trade aETH freely to obtain liquidity. Similar to the StaFi method, the platform will establish an aETH/ETH incentive pool on a platform similar to Uniswap to realize the tradable and tradable aETH p. When the platform transfers the ETH deposited by the user to the 2.0 contract, the user will be able to receive aETH, which means that the user’s ETH will be locked.
The project party provides deposit incentives to encourage users to use Stkr. Before November 16, 2020, for each ETH deposited, 1000 ANKR token rewards will be airdropped, and a snapshot will be taken on November 16.
How to use the Stkr platform?
The Stkr platform is more intuitive to operate, and the address is attached below.
First, click “Launch App” in the upper right corner. In the pop-up three login options (MetaMask, TrustWallet and WalletConnect methods), select your commonly used Ethereum wallet.
Here we take the Little Fox MetaMask as an example. After clicking login, an option will pop up. You can select “Start Staking” at present. Note that the minimum deposit on the Stkr platform is 0.5 ETH.
Next, click on StakeMore:
Then select the amount of ETH to be pledged. The estimated earnings will be displayed on the page. Check the box at the bottom left to agree to the agreement, then click the Stake button, and submit to complete the pledge.
The progress of the project on the Stkr platform is relatively fast, and it may be one step ahead by providing airdrops to incentivize users to mortgage.
Address: https://stkr.io/
8. Unmanaged Blox
The main selling point of the Blox Staking project is to provide a non-custodial ETH mortgage method. The current minimum threshold is 32 ETH.
To put it simply, Blox Staking provides a series of tools that allow users to directly use their local desktop software to run and manage validator nodes without storing their private keys on the platform. The LeastAuthority audit team is currently conducting a security audit of the platform’s code.
Blox Staking provides an infrastructure called Blox Infra to help users run nodes, and users only need to pay a fee. However, due to the remote signature method, users do not need to deposit assets in Blox Staking, which ensures the security of users’ assets.
Blox Staking is not suitable for retail investors to participate. Although a series of service tools are provided to lower the threshold of running nodes, the capital threshold of 32 ETH and some settings required for the construction (which may also be completed by ordinary users through the tutorial) also block many ordinary users.
The Blox Staking team also knows this. They designed a decentralized mortgage pool, hoping to lower the barriers to participation, using a decentralized method to allow users with a small amount of money to participate, and there is no need to run nodes by themselves. The project is expected to go online after the launch of the Beacon Chain next month. According to the roadmap, it is the fourth quarter of this year.
However, according to the official website information, the decentralized mortgage pool for retail investors will not be available until the third quarter of 2021. Therefore, in the short term, Blox Staking is not a suitable channel for ordinary users. Teams who are interested in running nodes may Can consider it.
Address: https://www.bloxstaking.com
Nine, platform RocketPool
According to the introduction of the website, let’s briefly understand how the project works. RocketPool provides software tools that allow node operators and users to connect. According to the website, whether it is individual users, the operation team of the node or other application parties such as DApps, they can participate.
The participation method of ordinary users is the simplest. In addition to providing a convenient and easy-to-use user interface, in order to release the liquidity of mortgage tokens, RocketPool designed rETH tokens as a deposit certificate, which is very similar to Ankr’s aETH.
The participation threshold is 0.01 ETH. After users deposit in Ethereum, they can get the corresponding rETH and can transfer funds freely. After logging in, set the amount of ETH that needs to be deposited, and the user can immediately get the corresponding value of rETH.
RocketPool has designed a social loss method to achieve deposit safety. Specifically, if a bad node is punished, all rETH holders will share a certain loss, so that everyone can share the loss, avoiding a single unlucky person from collateralizing the bad node and causing large losses Case.
On the other side of the coin, validators who run their own nodes can pledge 16 ETH to become validators and obtain higher returns. Compared with the requirement of 32 ETH pledged by Ethereum 2.0, the requirement is reduced.
RocketPool has no exact date to go live. After entering November, there is no update information on RocketPool’s Twitter, and we may still be unable to use the platform within a short period of time.
Address: https://rocketpool.net/
10. Other participants
Staking mining pool provided by the Ethereum PoW mining pool
Take stake.fish as an example. Ethereum and Bitcoin mining pool f2pool were created to provide users with a non-custodial way to run Ethereum 2.0 validator nodes. The minimum deposit requirement is 32 ETH. Stake.fish is still in the testing phase, and it is expected to be officially launched after ETH 2.0 is launched. Since service providers such as mining pools are created for B-end users, we will simply skip them here.
Other Ethereum PoW mining pools should also provide staking products for ordinary users in the future.
StakeWise
StakeWise provides a simple and easy-to-use mortgage interface, and supports two modes of retail mining pools and large independent validator nodes. StakeWise is still in beta. The way to release the liquidity of mortgage tokens is also similar to the previous platforms: after users deposit ETH, they can get stETH as a deposit certificate.
StakeWise also provides a separate validator option. Users need to pay 10 DAI tokens for each validator node as a monthly fee, and then deposit at least 32 ETH, and the platform will run the node on its behalf.
There is no clear information about when the official version will be launched. Judging from the current number of community members, the attention of the project seems to be insufficient. Especially with a centralized approach, users also need to judge the safety of the project by themselves.
Staked
Staked provides custodial services to participants who hold a large amount of ETH tokens, such as large accounts, custodial service providers, or exchanges. The minimum deposit is 32 ETH and a fee of USD 5 is charged for each verification node. Many service providers who don’t want to run their own nodes can design corresponding products to attract ordinary currency holders to participate, and then use infrastructure providers such as Staked to avoid the trouble of self-operation and maintenance. Staked and RocketPool should have a cooperative relationship. On the official website, ordinary currency holders will be guided to RocketPool to participate in ETH 2.0 mortgage.
CodeFi: The pledge service provider behind the exchange
Many exchanges will not choose to build their own ETH 2.0 node, but choose to become a channel provider, and outsource the operation and maintenance of the verification node to other companies. Platforms such as CodeFi, Figment, and BisonTrails provide such services.
According to reports, in CodeFi’s pledge pilot program, Binance, Crypto.com, DARMA Capital, Huobi Wallet, Matrixport, and Trustology participated in many companies. In this way, the exchange can provide users with pledged mining pools, while running behind the scenes. Nodes are companies such as CodeFi.
CodeFi is a heavy participant on the Ethereum 2.0 staking track. CodeFi Activate and the Ethereum Foundation (EF) have collaborated to launch the Eth2 Launch Pad, which provides intuitive page guidance for hardcore users who run their own validator nodes.
Figment: Staking Infrastructure Provider
Figment is a blockchain infrastructure provider based in Canada and a platform for the B-end. It currently provides infrastructure for 14 blockchain networks including Tezos, Cosmos, and Polkadot to achieve pledge functions.
Figment Networks is supported by two leading blockchain venture capital companies Lemniscap & Prota Ventures and a founding team with more than 30 years of experience in successful Internet infrastructure and software companies. LiquidStake will use the staking service provided by Figment.
BisonTrails
Similar to Figment and CodeFi, BisonTrails is also a service provider that provides pledge infrastructure for enterprise users, providing a series of tools and services to enterprise users and running nodes on their behalf. Currently BisonTrails provides a Pioneer program, which allows participants to try it out in advance.
11. Summary
Just like choosing a wallet or an exchange, choosing a mortgage service provider also requires multiple trade-offs to minimize risks. For ordinary currency holders, when choosing among different pledge service providers or mining pools, the issues that need to be considered are:
- What mechanism does the platform use to protect the security of the pledged assets? Will the platform run away?
- What method is used to run the verification node on the platform? Is it a self-built machine or a third-party solution?
- If the verification node is punished, will it affect the interests of token holders?
- Can the pledged assets obtain liquidity, and where can the corresponding liquidity tokens be traded?
Ethereum provides incentives similar to digital bonds for long-term currency holders, but also requires participants to have enough patience. Choosing a third-party service provider can lower the threshold and reduce troubles. At the same time, uncertainty and potential risks also follow, and you need to carefully identify them.
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Disclaimer: This article is the author’s independent opinion, does not represent the position of the Blockchain Research Society (public account), and does not constitute any investment opinions or suggestions.
