Ethereum staking: all your options to get a 5% return in ethers

The Merge event in Ethereal has kept the entire crypto industry on edge for many months. This historical transition has been carried out perfectly, and now the time has come to learn how to take advantage of the new features of the network, and in particular the income in ETH that Ethereum staking can provide. Whether you are in possession of fractions of the second crypto market capitalization or true “Ethereum whale”summary of your options.

Ethereum 2: everything evolves, nothing changes

As of September 15, 2022, the blockchain Ethereal saw your consensus mechanism – or more precisely the method that allows selecting the node in charge of integrating the next block in the chain -, evolve proof of work (Proof of Work or PoW) proof of stake (Proof of Stake, or PoS).

So now we’re talking about ethereum 2.0 network, although this name is no longer relevant because it can be confusing: the name of the network therefore remains officially “Ethereum”. In fact, the network has not really “evolved”, it is simply a question of integrating the beacon chain (consensus layer or consensus layer that operates on proof of stake, before ETH 2.0) to the “main” network (executive layer or execution layer, before ETH 1.0, that integrated proof of work before The Merge).

Thanks to the proof of stake mechanism, it is now possible anyone with ETH on the Ehereum network to stakethat is, to block them in the Ethereum network to participate in the validation of transactions, which allows to obtain a return, and this since December 2020 when the chain of beacons was activated, before actually being integrated into the main network around 1 ago one week.

Therefore, we will detail in this article the different options available to benefit from the ethers you have.

Yields and conditions for Ethereum staking

Know that the performance is variable over time depending on the total number of ETH locked. The higher the number of ETH staked, the lower the return.

Currently, the APR is around 5%, with 14.6 million ETH staked on the Ethereum network.

Graph showing the number of ETH staked since the launch of the beacon chain. Source: beaconcha.in

Important point: the locked ETH, as well as the rewards, will only be accessible after the Shanghai update, the date of which is not precisely set a priori, and which should occur in mid-2023.

What options are available to me for Ethereum PoS staking?

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Ethereum Staking: I have 32 or more ETH and the technical skills to create my own node

Probably the option that suits a minority of you. However, this is the method that allows you to get the maximum return. you get your rewards directly from the protocol when you create a new block, but also when you participate in the verification of blocks produced by other validators. From the merger, you also receive part of the transaction costs of the block you validate.

Perfectly stable Internet connection, suitable computer hardware, private key validation management, risk of sanction called “clipping” in case of technical problem in the node… Therefore, setting up your own node requires some experience and implies certain risks that you do not have, you will not have to worry about the following betting methods.

It must be specified that a The Ethereum node requires 32 ETH, no more and no less. For example, if you want to stake 35 ETH, you will need to stake the remaining 3 ETH using another method (pooling).

can you help me Ethereum official link providing all the instructions to mount your own node.

I have 32 ETH or more and I want to delegate the technical aspect to a third party

In this case, a the third-party node operator manages the technical part delicate described above. You are your own validator and keep the validation keys of the node. In other words, you have access to all of your funds. However, you are still dependent on the service provider that has your signing keys and can, for example, try to act maliciously, which can lead to the total loss of funds, or even a penalty and the loss of a part of your ETH. This risk is obviously low, but it is important to underline it.

Several providers offer this service, for example all nodes, Oveneither BloxStake. You can find more information by following this Link.

I have less than 32 ETH Where I want to fully delegate the management of my ETH, regardless of the amount

Most common configuration. The concept is simple: you send your ETH to a third party who will do the staking for you.

It has many advantages associated with it: there is no minimum amount of ETH to benefit from participation, rewards received every x days, daily or even continuously, and very often liquidity token distributed in exchange according to a 1: 1 ratio. (eg stETH for decentralized Lido protocol) in particular by decentralized protocols, but also by certain centralized platforms like Binance (with BETH), which can be traded on DEFI platforms, or traded again against ETH after the Shanghai upgrade.

The third may correspond to a decentralized protocol or a centralized platform.

decentralized protocol

The best known is undoubtedly Swimming pool : Open source DAO audited many times, it is the largest ETH custodian by holding around 30% of all ETH holding. Their services are available directly through the app. live ledger for those who store their ETH in a Ledger key.

The risk is moderate but not zero: in fact, no computer protocol can be immune from a code error, or even a computer attack.

There are many other decentralized protocols, each with its own specificities. We will cite as examples Rocket Pool, Ankr or StakeWise.

centralized exchange

The vast majority of major centralized exchanges offer Ethereum 2.0 staking, with Ethereum 2.0 being the most popular currently base of coins, kraken Y Binance.

Take the example of Binance: you have ETH in your Binance cutosdial wallet and want to use it to participate in the operation of the network. It delegates its ETH to Binance, which will take care of pooling the ETH deposited by its clients and will establish an Ethereum node. In exchange, you get BETH in a 1:1 ratio.

You will then periodically receive BETH corresponding to your participation rewards. You can then use your BETH on Decentralized Finance Dapps on the Binance SmartChain to generate additional income. Once ETH withdrawals have been authorized on the Ethereum network, you can perform the reverse mechanism to retrieve native ETH from the Ethereum 2.0 network from your BETH.

The risk here is related to the exchanger itself: in the event of financial difficulties or a hack of the platform, your funds are de facto no longer guaranteed. However, this is the simplest method, easily accessible to novice investors.

Many solutions have emerged to allow multiple profiles to take advantage of the Ethereum 2.0 stakeout : From the homemade Ethereum node to the solutions offered by centralized exchangers. Each solution has its advantages and disadvantages, you decide which one suits you best.

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