ETH2.0 is advancing steadily, how should ordinary users participate in the pledge?

On December 1 last year, the long-awaited Ethereum 2.0 (beacon chain, phase 0) was released. In phase 0, users are allowed to pledge a minimum of 32 ETH to become a validator of the beacon chain, and can obtain pledge income. This also means that new opportunities for passive income have emerged.

Vitalik Announces Ethereum Upgrade on Social Media

Participating in Ethereum 2.0 pledge is to participate in the network by locking ETH in the smart contract. After ETH is locked, the user becomes a verifier and can get rewards by confirming the block. After the launch of the new version of the Ethereum network based on the PoS (Proof-of-Stake) consensus mechanism, staking became possible. The PoS consensus mechanism is similar to "mining", but does not consume computing power resources. The verifier runs a special node by locking the tokens in the wallet.

The 5 Phases of Ethereum 2.0 Upgrade

Phase 0: The Beacon Chain goes online and the PoS mechanism begins

Phase 1: The shard chain is put into use

Phase 1.5: Integration of PoW mechanism and PoS mechanism

Phase 2: Ethereum Account Upgrade

After the 2.0 upgrade is completed: the performance of Ethereum has been greatly improved

But to become an Ethereum 2.0 validator, you need to stake at least 32 ETH, which is quite a lot for an average crypto investor. As of August 11, 2021, 32 ETH is worth over $100,000. Faced with such a high threshold, how can ordinary investors participate in the pledge of ETH 2.0?

Before we start, there are a few important things to state up front:

• The APY (annual rate of return) of Ethereum is not stable. As the total number of pledged ETH increases, the APY will also decrease. APY in this article refers to data as of this writing (August 4th).

• The stake cannot be redeemed until the upgrade is complete (which may take 1-2 years). You need to wait for a small upgrade after the merger of the main network and the beacon chain before you can withdraw money.

• This article does not contain any investment advice. If you want to invest, be sure to do your own research and understand all the risks.

The following will introduce three ways that ordinary investors can participate in staking.

1. Participate through the pledge pool

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Source: beaconcha.in

Let’s look at two examples of head staking pools, Ankr and Rocket Pool.

Staking through Ankr, the user experience is very good, but this platform still has a minimum pledge amount limit, users need to hold at least 0.5 ETH, which is equivalent to about 1589 US dollars. The APY of staking through Ankr is 9.64% (August 4th data), however, Ankr will charge a 15% fee for all staking rewards, which it uses to build infrastructure and issue synthetic assets aETH (if the user does not intend to continue Once you hold ETH, you can sell your aETH at any time). Calculated in this way, if the user pledges 1 ETH through Ankr, the daily income is 0.331 US dollars.

The minimum pledge amount of Rocket Pool is lower than that of Ankr, only 0.01 ETH, about $31. Like Ankr, Rocket Pool provides users with a tradable synthetic asset rETH. Rocket Pool’s APY is 9.8% (data as of August 4th), and a 10% service fee is charged, but if you hold more than 16 ETH, no commission is charged. Calculated in this way, if the user pledges 1 ETH through Rocket Pool, the daily income is 0.42 US dollars.

2. Participate through exchanges

In fact, compared to the pledge pool, there is an easier way to participate in ETH2.0 pledge: participate through exchanges. Investors only need to register or use an existing account, withdraw coins or buy ETH, and make a pledge. The interface of the exchange is clear and beautiful, and it is easy to operate. It is a good choice, but in order to avoid risks, it is best to choose a large exchange. For example, OKEx is a relatively safe pledge platform.

OKEx launched the Ethereum 2.0 pledge mining service on December 14, 2020. Users can pledge ETH with one click, and the minimum participation limit is 0.1 ETH. After the pledge is successful, the user will obtain the mining certificate BETH at a ratio of 1:1, and receive the mining income every day. Mining income will be issued in the form of BETH according to the number of pledges on the chain and the lock-up time. After the Ethereum 2.0 mainnet goes live, users can exchange it back to ETH 1:1 according to the amount of BETH they hold. Based on the on-chain rules of Ethereum 2.0, the pledged funds will be locked for 1-2 years and cannot be redeemed in advance, but BETH can be withdrawn flexibly. ETH2.0 mining income is dynamically adjusted according to the amount of locked positions on the chain, and the annualized return rate is expected to be between 4% and 20%. Currently, the return on holding BETH is 6.14%.

In general, participating in ETH pledge on Ouyi OKEx has a low participation threshold, can obtain stable income, has high flexibility, and can become a witness of the performance upgrade of the Ethereum mainnet at a very low cost.

The following figure shows the specific process of participating in ETH2.0 lock-up mining on OKEx APP:

3. Participate through the ETH lending platform

The ETH lending platform is a balanced choice between staking and the ability to lock ETH to borrow tokens after staking, and is suitable for investors with a high risk appetite and seeking to maximize profits. For example, the lending platform LiquidStake allows users who pledge ETH to choose to use the pledged ETH as collateral to lend USDC.

Users can earn income through staking and retain the ability to trade, invest, or hold liquid assets. LiquidStake integrates customers' encrypted assets and transfers them to major pledge service providers, and users can obtain loans (corresponding encrypted assets) from the first moment they pledge ETH.

Let's look at the numbers. Investors who pledge on the LiquidStake platform will receive 9.86% APY, but need to pay 14.91% handling fee. In addition, the USDC loans obtained by investors are equivalent to the value of the pledged ETH. Therefore, according to the rate of return data on August 4, users can get 0.4 USD per day by betting 1 ETH.

What is the profitability of staking?

Finally, it is also important to note that the validator's reward will be affected by the total amount of pledged ETH. Depending on the total amount of ETH staked, the validator's annual return is roughly between 2% and 20%. The profit investors get from staking is not high, but it is relatively stable and the risk is low.

The more total ETH staked, the lower the APY

Of course, this profit is still greater than the average interest on bank deposits, so ETH pledge is a good choice. However, it is important to analyze the risks of your chosen staking method and keep in mind that ETH is also highly volatile. Therefore, in addition to earning income from staking, investors may also gain some additional gains or losses due to changes in the price of ETH in the market.

Again, when making any investment, you must do your own rational analysis.

Author: sergey-baloyan

Source: hackernoon.com

Original link: How To Stake ETH 2.0 Without Running a Node and 32 ETH | Hacker Noon