In-depth interpretation of the current situation and future development of Ethereum pledge
Original compilation: Kxp, BlockBeats
Original compilation: Kxp, BlockBeats
The present and future of the Ethereum staking mechanism can be summarized into the following four aspects:
market leader
best yield
trend
catalyst for the future
ETH has the best Tokenomics in Crypto. If it still uses the PoW algorithm, then $4.7 billion worth of ETH will be issued - $4 billion more than $UNI's total market cap. Also, the supply of ETH is dwindling and deflationary as we are currently in a bear market.
ETH has the lowest collateralization ratio (14.8%), while offering a competitive annual interest rate of about 4.5%. In contrast, other blockchains have a much more concentrated distribution of tokens, with insiders, teams, and early investors actively staking for returns, which also means that more ETH can (and will) be locked.
Ethereum’s newly built staking infrastructure is also one of the reasons for its low staking rate. Among them, Lido leads with a pledge rate of 30%, followed by centralized exchanges Coinbase (12.5%), Kraken (6.8%), and Binance (5.4%). In the future, I expect staking to become more decentralized.
That’s exactly what’s happening — over the past month, Kraken, Coinbase, and Huobi have lost market share. In fact, 36% of all ETH staking withdrawals came from Kraken.
For ETH, staking withdrawals are considered a bearish signal. More withdrawals than deposits means long-term holders are selling, and in fact, net inflows have been negative since the Shanghai upgrade.
Currently, about 40% of ETH stakers have a negative ETH PnL, and 29% have staked their ETH at current prices. Correct me if I'm wrong, but this looks like a bullish signal to me.
ETH staking is the best risk and reward adjusted opportunity to achieve financial freedom, and I recommend doing it in the following order of priority:
· Protect ETH deposits
· leave it alone
· Maximize the profit of ETH
Don't chase the highest yield, protect your ETH principal from hacks and bugs.
If you want to protect your principal, consider using a blue-chip DeFi protocol or a top CEX. Opponents argue that if you have less than $10,000 in stake, you're better off staking on a CEX or not at all, as the on-chain transaction fees for staking could eat up all the gains.
Liquid collateralized derivatives are one of the best ways to earn income. I would recommend stETH or rETH due to their high adoption rate in DeFi. You can lend out stETH/rETH, borrow stablecoins to cover day-to-day needs, and let the proceeds pay off your debt, which gives you roughly 4-5% APY on average.
With Rocket Pool, you can run your own node to earn 7.01% APR + RPL rewards. This is great for individuals looking for low-risk node operations, but you'll need some specialized skills. However, there are risks involved in doing this - if the node fails, you will also suffer losses.
You can also boost your yield with leveraged staking, yield aggregators, and farms. For example, Instadapp Lite offers 8.5% APY. It converts ETH to stETH and leverages it for PoS staking against standard ETH for higher rewards.
Currently, a total of 83 protocols are available for ETH staking, and their TVL is about to surpass DEX. While only 15% of ETH is collateralized, liquid collateralized derivatives are larger than lending, cross-chain bridges, and CDP stablecoins. Not only that, but it will continue to grow.
Plus, there’s a new generation of staking protocols coming soon, and if you’re feeling adventurous, you can earn upwards of 50% APY. In this regard, my suggestion is that you can get benefits by investing in their Tokens instead of taking your best chance to achieve financial freedom - ETH principal.
Probably one of the most talked about protocols is Eigenlayer, which uses restaking to increase the security of other networks. The protocol will increase the demand for ETH staking, but it will also double the risk.
Distributed Verification Technology (DVT) is another development direction. Currently, running an Ethereum node requires 32 ETH and is technically demanding. DVT simplifies this process by enabling "squad staking," which allows teams to collectively stake varying amounts of ETH.
Currently, several protocols are working on simplifying staking while improving decentralization and security, including:
· divalabs
· Obol Labs
· ether.fi
· Stakehouse
· ssv network
Ethereum is considered as the best option in Crypto to gain financial freedom. At present, 5-9% APY can be safely obtained on ETH, but since it is now a bear market and the activity on the chain is low, when the bull market comes, Gas usage will surge, thereby increasing staking income and ETH burning.
Higher yields increase ETH's passive income appeal, driving prices higher. Although we may need to sacrifice some yield, the ultimate goal is to protect the principal of ETH. For maximum upside and reduced risk, I would bet on LSD/DVT Token.
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