ETH2.0 Staking, how to participate in "no node, no lock-up, any number"? ETH2.0 Staking Ecological Bottom

With the launch of the Ethereum 2.0 storage contract, the Ethereum 2.0 of the POS mechanism has been slowly opened. Although it is officially available, it still needs to wait for 2-3 years.

524,000 ETH needs to be deposited into the storage contract to start the Ethereum 2.0 network. If all goes well, in half a month, Ethereum 2.0 will usher in a milestone event: the creation of the beacon chain. After satisfying the requirements of the block height and the number of pledged assets, the Ethereum community can declare: Ethereum 2.0 is late but arrived.

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1. How do ordinary users benefit?

After Ethereum 2.0 goes online, what opportunities will ordinary people have to participate? The main way to play is to share the income of the network by staking tokens. But to make it clear, we have to briefly understand the changes in the Ethereum 2.0 network.

From PoW to PoS: Changes in Ethereum Token Mechanism

Ethereum 2.0 uses the PoS mechanism to replace the PoW algorithm in the 1.0 phase.

Under the PoW mechanism, the competition is machine computing power, and miners can participate in it without mortgaging Ethereum, and earn income based on computing power and luck. There are fewer ways and channels for ordinary people to participate in it.

After the launch of Ethereum 2.0, the PoS consensus algorithm is adopted. At this stage, the Ethereum network will reward block producing nodes, and node participants, in addition to turning on their computers and running them 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 experience abnormalities or malicious operations, the mortgaged assets will also be fined and confiscated to encourage node verifiers to align with the interests of the Ethereum network.

Under the PoS mechanism, additional opportunities are brought:Mortgage ETH and share the system rewards of the Ethereum PoS network. Use the DeFi analogy that everyone is more familiar with: Ethereum 2.0 has added native coin deposit and mining rewards, but the premise is to become a validator node before it is possible to share this part of the income.

How to divide the money? This has always been a big problem, but also a big opportunity. Don't underestimate the newly added mortgage asset requirements of Ethereum 2.0, which creates a new revenue track:first level title

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 coin holders who are not hardcore players, the best way to participate in Ethereum 2.0 Staking is definitely not to run nodes by themselves, otherwise they will encounter a series of difficulties.

The first is the technical threshold and hardware requirements for running nodes.Not only do you need to purchase well-configured machines to maintain operational performance, but you also need a series of operation and maintenance tools to ensure that the verification nodes are not abnormal. Although the fine standard of Ethereum 2.0 is relatively low at this stage, ordinary participants are neither willing nor able to face this part of trouble/risk.

The second is the capital threshold. Only 32 Ethereum can be pledged to become a validator.In addition, this part of tokens will always be locked, and together with the potential income, they will not be unfrozen until the second phase of Ethereum (or phase 1.5). Based on the current value of 3,000 RMB, 100,000 RMB will be locked for 2 years. This threshold must not be faced by ordinary currency holders.

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3. What kinds of third-party services are there?           

Participating in Ethereum staking, the yield is huge, which will attract a large number of token holders to participate.

When the entire network reaches 520,000 ETH pledges, the annualized rate of return on 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 currency holders.

As mentioned earlier, running node mining by yourself 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 them into three categories:

• Centralized exchanges and mining pools.The deposit threshold is low, you don’t need to run the node yourself, and part of the income will become the service fee for the service provider.

• Decentralized wallet and service provider. By means of smart contracts, coin deposits and mining are realized. As for node operation, leave it to the service provider.

• platform side.No matter which of the above methods is used, someone needs to run the node in the end, so some projects go down one layer, acting as the underlying infrastructure of various mortgage service providers, responsible for running the node, and obtaining fee income.

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4. 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 topic of Staking 2.0,Major centralized exchanges such as Binance, Huobi, and OKEX have indicated that they plan to deploy services related to Ethereum 2.0 Staking.Today, I communicated with friends from the old exchange AEX, and also mentioned that they will plan more interesting services related to Ethereum 2.0 Staking for users.

In addition, the largest compliant asset exchange in the United StatesCoinbase announced its transition to global Staking services at the end of last year.Take Staking as the most critical investment strategy in the blockchain ecosystem. As Ethereum 2.0, the largest PoS ecosystem, is about to start, I believe we will see news from CoinBase soon.

It can be expected that in the next one or two months, news of the opening of the Ethereum 2.0 mining pool will be heard from many exchanges. At present, there are not many companies that can provide a clear launch date, and CoinDCX is one example.

According to reports, CoinDCX, India’s largest cryptocurrency exchange, is ready for Ethereum 2.0 pledge, and the participation threshold is 0.1 ETH. CoinDCX will use the pooled Ethereum funds to create validator nodes, and in return, will draw part of the fees to cover hardware and infrastructure costs.

Ethereum 2.0 Staking will bring an additional problem: since the process of transferring from Ethereum to the deposit contract and converting it into tokens on Ethereum 2.0 is one-way, and the tokens deposited within two years are expected to be locked Therefore, how to activate the liquidity of locked funds needs to provide a suitable solution.

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5. Institutional LiquidStake

LiquidStake: An Ethereum Staking service that can be participated by individuals and institutions.

As Ethereum 2.0 goes live, an interesting question is:How institutional holders can get involved.According to reports,

According to reports,DARMA Capital, an active participant in the Ethereum ecosystem and an encrypted asset investment company, launched the LiquidStake project to support Ethereum holders' pledge mining. 

Specifically, LiquidStake allows individuals and institutions to deposit assets. The project does not create additional tokens. In order to solve the liquidity problem, depositing users can use the deposited ETH as collateral to borrow USDC. The project party will charge lending fees and part of the mortgage income. Individuals can deposit any amount of ETH tokens, and institutional investors can participate 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 and serve the Ethereum network as validator nodes.At present, LiquidStake is not yet online and is still in the testing stage.

Address: https://liquidstake.com/

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6. Platform StaFi

StaFi is a decentralized protocol that provides liquidity for Staking assets, which of course also includes tokens pledged in the Ethereum 2.0 network.

The solution proposed by StaFi is: users deposit into the contract to participate in the pledge, without running the node client, they can get the ERC20 token rETH issued by the platform, anchoring the user's principal and corresponding income. rETH has no transfer restrictions, and can also participate in applications such as DeFi lending agreements.

Specifically, users can pledge a minimum of 0.01 ETH, and StaFi has deployed smart contracts on the ETH PoW chain to achieve decentralization. According to StaFi:

Contracts related to user staking are mainly deployed on Ethereum, but the solution 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 it through Original Validators. Original Validator refers to the ETH 2.0 validator who joined the StaFi ETH2.0 Staking Contract plan.

StaFi provides tools to validator node operators. After the team registers and pays a deposit, it can become an Original Validator. The payment of the verification fee is to ensure that the node will not affect the user's funds when it encounters punishment, and it is borne by the deposit paid by the node.

The income of the validator node comes from the commission received for providing services. But in fact, for quite 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 officially, 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-signature and other means.At present, the launch date of StaFi's ETH2.0 liquidity solution has not yet been determined, but we will pay close attention to it.

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7. Platform Stkr

Ankr: Provide ANKR airdrop rewards to motivate users to use the liquid staking platform Stkr.

Ankr's current main business can be divided into two parts:

The Stkr platform is currently online, and users can already deposit ETH through Stkr. At present, there are no other platforms available in the market.

At present, the ETH deposited by users into Stkr will be stored in the smart contract for one week.It is estimated that after a week, the contract review can be concluded. 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 protocol is deposited in a one-way way, it means that the pledger will not be able to withdraw ETH.

As we mentioned earlier,The liquidity problem of locked-up tokens is something that every project party needs to pay attention to. How does Ankr solve the liquidity problem?

For the ETH deposited through the Stkr platform, the user will obtain the corresponding interest-earning certificate aETH, and the user can freely transfer or trade aETH 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 tradability and circulation of 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 every ETH deposited, 1,000 ANKR token rewards will be airdropped, and a snapshot will be taken on November 16.

How to use the Stkr platform?

The operation of the Stkr platform is relatively intuitive, and the address is attached below.

First, click "Launch App" in the upper right corner. Among the three login options that pop up (MetaMask, TrustWallet, and WalletConnect methods), choose your usual Ethereum wallet.

Here we take Little Fox MetaMask as an example. After clicking Login, an option will pop up. Currently, you can choose "Start Staking". Note that the minimum deposit on the Stkr platform is 0.5 ETH

Next, click StakeMore:

Then choose the amount of ETH to mortgage. The estimated revenue will be displayed on the page. Check the box on the lower left to agree to the agreement, then click the Stake button to submit and complete the pledge.

The progress of the project on the Stkr platform is relatively fast. By providing airdrops to encourage users to mortgage, it may be one step ahead.

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8. Unmanaged Blox

The main selling point of the Blox Staking project is that it provides a non-custodial ETH mortgage method.The current minimum threshold is 32 ETH.

Briefly,Blox Staking provides a series of tools that allow users to directly use their own local desktop software to run and manage validator nodes without storing 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 service fees. However, due to the remote signature method, users do not need to store assets in Blox Staking, which ensures the security of users' assets.

After downloading the Blox Staking client software, users need to configure their own cloud server (the platform provides a tutorial), and then configure the corresponding node key into the Blox Staking client.

Blox Staking is not suitable for retail investors to participate. Although a series of service tools are provided to lower the threshold for running nodes, the capital threshold of 32 ETH and some settings required for building (which can also be completed by ordinary users through tutorials) also keep many ordinary users out of the door.

The Blox Staking team also knows this. They designed a decentralized mortgage pool, hoping to lower the threshold for participation, and use a decentralized method to allow users with small currency holdings to participate without running nodes themselves.The project is expected to go live after the creation of the beacon chain next month. According to the information on the roadmap, it will be the fourth quarter of this year. 

However, according to the information on the official website, the decentralized mortgage pool for retail investors will not be launched until the third quarter of 2021, so Blox Staking is not a suitable channel for ordinary users in the short term. Can consider it.

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9. Platform RocketPool

RocketPool was created in February 2017 and has been focusing on the direction of Ethereum 2.0 mortgage. It is still in the testing stage, and the latest version is 2.5 Beta.

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 introduction, whether it is an individual user, the operation team of the node or other application parties such as DApp, all can participate.

Regular users are the easiest way to participate. 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 deposit certificates, which are very similar to Ankr's aETH.

The participation threshold is 0.01 ETH. After users deposit in Ethereum, they can get the corresponding rETH, which can be transferred freely. After logging in, set the amount of ETH that needs to be deposited, and the user can immediately obtain rETH of the corresponding value.

RocketPool has designed a way to socialize losses to achieve deposit security. Specifically, if a bad node is punished, all rETH holders will share a certain amount of losses, and the method of letting everyone share the loss avoids a single unlucky person who mortgages a bad node to cause large losses Case.

On the other side of the coin, validators who run their own nodes can pledge 16 ETH to become a validator and obtain higher returns, which is less than the 32 ETH pledge required by Ethereum 2.0.

There is no exact date for RocketPool to go live yet.After entering November, there is no update information on RocketPool's Twitter, and we may still not be able to use the platform for a short time.

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In a recent blog post, Blox Staking summarizes some of the project parties in the Ethereum 2.0 staking space. We briefly introduce it in the last part of the article.

Staking pool provided by Ethereum PoW mining pool

Take stake.fish as an example, created by the Ethereum and Bitcoin mining pool f2pool, it provides users with a non-custodial way to run the Ethereum 2.0 validator node, and the minimum deposit requirement is 32 ETH.At present, stake.fish is still in the testing stage, and it is expected to be officially launched after the launch of ETH 2.0.Since service providers such as mining pools are created for B-end users, we 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, supporting two modes of retail mining pools and large independent validator nodes.StakeWise is still in beta.The way to release the liquidity of pledged tokens is 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.

When the official version will be launched, there is no clear information yet. Judging from the current number of people in the community, the attention of this project seems to be insufficient. Especially with a centralized approach, users need to judge the security of the project by themselves.

Staked

Staked provides escrow services for participants who hold a large amount of ETH tokens, such as large investors, custodian service providers or exchanges, with a minimum deposit of 32 ETH and a fee of $5 for each verification node.Many service providers who do not want to run their own nodes can design corresponding products to attract ordinary retail investors 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, and the official website will guide ordinary currency holders to RocketPool to participate in ETH 2.0 mortgages.

CodeFi: The Staking Service Provider Behind the Exchange

Many exchanges will not choose to build their own ETH 2.0 nodes, but choose to become channel providers, and outsource the operation and maintenance of verification nodes to other companies. Platforms such as CodeFi, Figment, and BisonTrails provide such services.

According to reports, many companies such as Binance, Crypto.com, DARMA Capital, Huobi Wallet, Matrixport, and Trustology participated in CodeFi’s pledge pilot program. Nodes are companies like CodeFi.

CodeFi is a heavy participant in the Ethereum 2.0 staking track.CodeFi Activate and the Ethereum Foundation (EF) have partnered to launch the Eth2 Launch Pad, which provides an intuitive page guide for hardcore users who run their own validator nodes.

Figment: Staking infrastructure provider

Figment is a Canadian-based blockchain infrastructure provider and a business-oriented platform. It currently provides infrastructure for 14 blockchain networks such as Tezos, Cosmos, and Polkadot to realize the pledge function.

Figment Networks is backed by Lemniscap & Prota Ventures, two of the leading blockchain venture capital firms, and a founding team with over 30 years of experience in successful internet infrastructure and software companies. LiquidStake will use the staking service provided by Figment.

BisonTrails

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As mentioned earlier, after Ethereum 2.0 goes online, third-party pledge methods will become mainstream. Due to space limitations, this article is only for introductory ideas, and it is impossible to introduce each project one by one.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 between 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 does the platform use to run the verification node? Is it a self-built machine or a third-party solution?

• If the verification nodes are punished, will it affect the interests of token holders?

• Can the pledged assets obtain liquidity, and where can the corresponding liquidity tokens be traded?

Although Ethereum 2.0 provides a system-level reward mechanism, it is foreseeable that various Ethereum PoS mining pools and service providers will come in droves in the next one to two months. But it is worth noting that Ethereum 2.0 has just started, and there is still a long way to go before it is officially usable and transferable.

Ethereum provides incentives similar to digital bonds for long-term currency holders, and it also requires participants to have enough patience. The way to choose a third-party service provider can lower the threshold and reduce troubles. At the same time, uncertainties and potential risks will also follow, which need to be carefully identified.

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Disclaimer: This article is the author's independent opinion, does not represent the position of the Blockchain Institute (public account), and does not constitute any investment opinion or suggestion.       

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Disclaimer: This article is the author's independent opinion, does not represent the position of the Blockchain Institute (public account), and does not constitute any investment opinion or suggestion.