After years of testing and development, the "Merge" enabled Ethereum to successfully move from proof-of-work(PoW) to a more efficient consensus mechanism - Proof-of-stake(PoS). This paves the most important way for Ethereum's future expansion plan, and at the same time allows DeFi to have its own encryption-native yield tool-now ETH can be used to protect the blockchain in exchange for stable income.
In traditional finance, income assets will generate a huge market, and the Staking track with encrypted native yield tools will also allow Ethereum to have a larger ecology.
The upcoming Shanghai upgrade means that Liquidity staking is an important narrative for Ethereum and the entire crypto space this year. Liquid Staking is a new Liquidity trend that allows users to unlock their pledged ETH to obtain Liquidity and use it in the DeFi ecosystem.
Active staking ecology
Ethereum staking is a key feature in PoS Ethereum, which allows users to stake (lock) a certain amount of Ethereum (Ether) on the Ethereum network to become a validator of the network. This process not only allows users to obtain a stable return of about 5-8%, but also helps strengthen the security and scalability of the Ethereum network.
Currently, Lido Finance (stETH), which has the largest market share among liquid staking products, is not only the leading Liquidity staking protocol, but also one of TVL's largest DeFi protocols. On the Lido platform, users pledge ETH at a ratio of 1:1 in exchange for stETH. These stETH can be deployed on other platforms such as Yearn and AAVE , thereby improving the capital efficiency of users.
In summary, there are currently 4 ways to pledge ETH :
1. CEX class/full custody: Using the staking solution of the trading platform, there is no need to create verification keys and withdrawal keys. Fund management and node operations are completely completed by the trading platform, which belongs to the full custody model.
2. Pooled Staking: such as Lido and Rocket Pool's Staking solutions. Users do not need to create verification keys and withdrawal keys. Node operations and fund management are completed by operators in the big pool, which is an approximate full custody model, but the big pool sub-plan provides more room for operations.
3. SaaS (Staking as a Service): Staking services provided by third-party service providers need to create verification keys and withdrawal keys by themselves, but node operations and fund management are completed by third-party service providers, which is a Non-custodial model.
4. Solo class: You need to purchase hardware and set up nodes yourself, and manage the verification key and withdrawal key by yourself, which belongs to the completely decentralized mode.
Bullish staking landscape
Since the Ethereum Merge, the total amount of ETH has been reduced by more than 38,000 pieces through burning, and the annual inflation rate is -0.07%. In addition to the conventional DEX, ETH transfer, Stablecoin , and wallet, the ETH destruction contribution application in the past 30 days has become active. Institutions have been buying BTC and ETH. One of the reasons for the recent improvement may be that multiple funds and institutions have invested nearly $1.6 billion in Liquidity into the cryptocurrency market.
From the perspective of ETH pledgers, most of the ETH prices participating in the pledge are concentrated in the range of 2,500-3,500 US dollars, and only about 21.1% of the ETH prices are below 1,600 US dollars. From the perspective of principal and interest, that is, the pledged ETH principal + the rewards obtained for the pledge, 59% of the pledgers are still in the "underwater" state, that is, the current ETH price is lower than the price when they pledged. Pledgers are generally optimistic about the Ethereum network for a long time and participate in staking during the bull market cycle. Therefore, it is unlikely that Shanghai will choose to withdraw from staking ETH after the upgrade.
With most ETH stakers at a loss, there is little economic incentive to sell ETH at current prices. The price of about 2 million ETH pledged was in the range of 400-700 US dollars, which represented the earliest pledgers in December 2020. Since Liquidity staking was little known at that time, most of this part of ETH was Liquidity . The Shanghai upgrade will eliminate Liquidity risks and uncertainties Vesting period , and it will most directly affect impulsive short-term investors.
The Shanghai upgrade changes ETH from "long-term lock-up" to "current income", which may attract a large number of new participants, bringing a certain amount of potential buying pressure on ETH , especially when ETH has long-term appeal to institutional investors in the case of.
Good Staking Prospects
So, what is the future of Ethereum staking? Returns on Ethereum staking are typically between 5-8%, which is more attractive than most traditional investments. That makes it a reliable source of income, especially with the current bear market.
In addition, through pledge, more future expansion plans of the Ethereum network can be implemented. This will accelerate the development of decentralized applications, thereby increasing the attractiveness of the Ethereum network.
With the launch of Ethereum PoS, Ethereum staking will become a necessary process. Therefore, the importance of Ethereum staking will be even more prominent. Overall, the outlook for Ethereum staking is very promising, providing stable returns and improving the security and scalability of the Ethereum network.
Ethereum staking protocols are a growing field in the cryptocurrency world. Since the Ethereum Liquidity staking protocol is an open market, competition is also increasing. This means users can choose from more options and can get more competitive rates and better service.
Competitiveness of SaaS
Among the many Ethereum staking solutions, the most noteworthy is the SaaS (Staking as a Service) solution, which has many advantages and prospects compared to other solutions.
First of all, the SaaS solution provides users with a convenient way to participate in the Staking of ETH . Users only need to deliver it to the mining pool to enjoy the automated Staking service without having to deal with tedious technical details and management. very friendly.
Secondly, SaaS solutions are usually provided by professional Staking service providers. These service providers have rich experience and professional technical teams. They can adjust their server capacity according to market demand, and at the same time provide better services, such as improving The security and stability of nodes, reducing the risk of fines for Staking, etc.
Finally, SaaS solutions can also promote the development of decentralization. From a technical point of view, the mining pool cannot touch user funds and only provides operation and maintenance services, which is conducive to the decentralization of Ethereum nodes. This means that users no longer need to choose a pool with a high proportion of the network, resulting in the occurrence of "super large nodes". These measures will help promote the decentralized development of Ethereum.
In general, the SaaS model, as a convenient, safe, reliable and scalable staking solution, has very broad development prospects and will provide more users with opportunities to participate in staking.
The most representative SaaS service provider recently is Ebunker. Ebunker adopts a Non-custodial model. Unlike other custodial staking pools, Ebunker does not touch or manage users' funds, which means that users have full control over their assets. The user directly interacts with the official Ethereum mortgage contract, and does not need to let the third party know the withdrawal private key. Ebunker only provides node operation and maintenance services.
Compared with the traditional centralized model, this model enables users to independently manage their own private keys, avoiding the risk of user funds being violated by a third party. Therefore, the SaaS model has obvious advantages in protecting the security of user funds.
At the same time, Ebunker's open source code allows users to view and verify it at any time, so every execution layer and consensus layer rewards are completely transparent and directly correspond to transactions on the chain.
Of course, while the SaaS model has many advantages, it also has some disadvantages, that is, it cannot provide an LSD solution. Because in the SaaS mode, the user's private key is completely managed by the user himself, and the third-party service provider cannot directly process the user's funds, so it cannot issue LSD. This point needs to be paid attention to when using the SaaS model.
Finally, everyone who is interested in Ethereum is welcome to participate in the maintenance of the Ethereum network through staking, so that Ethereum can truly become a global decentralized super network.
