Users can choose to pledge pool or pledge on exchanges. Another platform allows pledgers to use pledged ETH as collateral to borrow money.
Original title: “If we don’t have 32 Ethereum, how should we pledge? 》
Written by: Sergey Baloyan
Translation: ChinaDeFi
In the rapidly changing crypto world, it is a fantasy to seek a relatively stable income. If you don’t have to find one, it should be a pledge. But Ethereum 2.0 requires 32 Ethereum to become a validator, so how should ordinary people without 32 Ethereum be pledged?
This article introduces the staking method in the state of not running the node without 32 ETH in the environment of Ethereum 2.0.
At the end of last year, on December 1, the long-awaited new version of the Ethereum network was released. Now anyone familiar with cryptocurrency and ETH can become a verifier of this network. This means that new opportunities for passive income have emerged.
The pledge of Ethereum 2.0 is to lock ETH in the smart contract to participate in the network as a validator and get rewards for confirming the block. After the launch of a new version of the network based on the Proof-of-Stake (PoS) consensus algorithm, staking becomes possible. This consensus algorithm is similar to well-known mining, but instead of using a computing resource validator to lock the coins in the wallet to run a special node.
To become an Ethereum 2.0 validator, you need to lock at least 32 ETH for investment, which is quite a lot for an ordinary crypto investor. The current price of 32 ETH is approximately more than $70,000. So, how do ordinary investors pledge ETH 2.0?
Some important things before starting:
Not a regular APY. The more ETH pledged, the lower the APY.
Users cannot withdraw their pledge before the future upgrade deployment is completed (this may take 1-2 years). After the mainnet and beacon chain are merged, withdrawals will be available in a minor upgrade.
This is not investment advice. Do your own research and understand all the risks.
Pledge pool
The pool is provided to an intermediary for people with less than 32 ETH, which will pool the users’ ETH for joint mortgage. The pledge rewards are distributed among pool members in proportion to their ETH share. Storage is decentralized, transparent, and protected by smart contracts. The pool charges a pledge fee, and some services have restrictions on the minimum amount of ETH deposited. Most staking pools release tokenized versions of staking-locked ETH, such as rETH. These ERC-20 tokens not only represent ETH, but also pledge income. The tokens can have the same symbol or name. But if they are not issued by the same pool, then they are different assets with different liquidity.
Give a few examples. For example, let’s look at two top suppliers, Ankr and Rocket Pool.
Staking through Ankr is quite comfortable, but there is still a minimum amount of ETH that needs to be pledged. The user will hold at least 0.5 ETH, which is equivalent to about $1150 today. The APY pledged by Ankr is 9.64%. But it is important to know that Ankr charges a 15% fee for all rewards. For this fee, Ankr provides user-friendly infrastructure and synthetic asset aETH, which can be sold immediately if the owner decides to stop staking ETH. Therefore, if an investor wants to pledge 1 ETH through Ankr, the daily return will be $0.331.
The minimum amount of ETH required for Rocket Pool to begin staking is low-only 0.01 ETH, currently about 23 USD. Like Ankr, Rocket Pool provides pledgers with a tradable synthetic asset called rETH. The APY of Rocket Pool is now 9.8%. Rocket Pool charges a 10% commission (if the user holds at least 16 ETH, it charges 0 commission), so if the investor holds 1 ETH, the current daily return will be $0.42.
Pledge on the exchange
One of the easiest options is to transfer ETH to an exchange or other custodial service wallet that provides dividends. However, dealing with centralized exchanges has a typical risk: users cannot control private keys.
Currently, staking ETH through an exchange is definitely the easiest way. Investors only need to register or use an existing trading account, deposit or buy ETH and pledge through a clear interface. Now it can be done on many exchanges, but due to the high risk of staking through exchanges, it is recommended to use only the most reputable exchanges. For example, Binance, Huobi, Coinbase, Kraken, and OKEx can be considered relatively safe staking platforms.
So, how much money can be made by staking ETH through the exchange? For example, Binance provides a convenient ETH 2.0 pledge with only a few requirements. Before the sharding chain starts, the pledged assets cannot be redeemed, which may take 2 years. Binance provides users with BETH tokenized assets at a ratio of 1:1, proving that users have provided ETH for pledge. Binance does not have a minimum ETH pledge limit, so basically, anyone can start doing this. In addition, Binance charges 0% for its services, which is very unique. Now, APY is about 9.32%. Therefore, by staking 1 ETH, the user will receive a reward of approximately $0.447 per day. It is important to emphasize that the APY used for staking will change over time.
Another example is the Kraken Exchange, which provides the same services but with a different condition. This exchange charges a 15% fee for all pledge rewards. In addition, Kraken has a so-called boarding process for pledged ETH. Rewards will start to be generated 20 days after the user presses the button. Therefore, if APY does not change much after the 20-day boarding period, then collateralizing on Kraken will enable users to live a daily income of about $0.38.
ETH lending platform
A balanced choice between staking and the ability of ETH locked for staking to borrow tokens. Suitable for risk traders and investors seeking to maximize profits. For example, LiquidStake allows ETH pledgers to use pledged ETH as collateral to borrow USDC.
Investors holding LiquidStake will receive an APY of 9.86% and pay a commission of 14.91% for the return. In addition, the USDC loan obtained by investors is equivalent to the value of pledged ETH. Now, by staking 1 ETH, users can get 0.4 USD per day.
What is the profitability?
Finally, it should be noted that the rewards of validators will be affected by the total number of locked ETH. According to this figure, the maximum annual return of the validator can be between 2 and 20%. Therefore, the profit that investors get from investment is not high, but it is relatively stable and the risk is low.
However, this profit is greater than the average interest you can get by depositing fiat currency into a bank account, so ETH pledge may be an interesting option. However, it is important to analyze the risks of the chosen staking method and remember that the price of ETH is quite volatile. Therefore, despite the investment profit, investors can get some additional profit or loss based on the ETH price in the market.
Source link: hackernoon.com
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