The overall feeling in the cryptocurrency landscape over the past week has been one of bubbling anticipation as the Ethereum network finally goes through its London hard fork, which includes transaction fee market reforms, thanks to EIP-1559.
London is the latest in a series of upgrades that are part of Ethereum’s measured transition from its original proof-of-work consensus model to a proof-of-stake model called Ethereum 2.0.
On Eth2, token holders who own at least 32 ethers (ETH) can operate a validation node and check transactions in the network. With the current price of Ether trading close to $ 2,700, the entry cost of running an Eth2 validation node is $ 86,400 – a price that is too high for most market participants.
To combat this problem, several options – including staking pools and centralized exchange staking – have emerged to offer all Ether token holders the opportunity to generate a return on their tokens.
Here is an overview of some of the top options currently available to Ether holders.
Another option for Ether holders who want to use their tokens and access their equity at the same time is Lido, a liquid staking solution for Ethereum.
Liquid staking protocols allow users to earn staking rewards without locking assets or maintaining staking infrastructure.
Via the Lido platform, users can wager their Ether without a minimum deposit, with a current APR of 5.4% after deducting the staking reward fee. In return for staked ethers, users receive stETH, which can be freely moved and traded at will.
According to data from DeFi Llama, Lido is currently the top ranked Ethereum staking pool and the eleventh largest Decentralized Financial Protocol (DeFi) by total banned value, currently valued at $ 3.26 billion in the Lido Protocol.
A proposal to list bETH (wrapped stETH on Terra) as security for @anchor_protocol has been submitted️
This allows users to borrow UST against staked ETH collateral and earn liquidity mining rewards using the secured lending of Anchor
– Lido (@LidoFinance) August 2, 2021
Lido’s liquid staking capabilities are currently being expanded thanks to an initiative by the Anchor Protocol Community to list bETH – a packaged form of stETH on the Terra blockchain – as a form of security on the Anchor platform that enables it will anchor users to borrow TerraUSD (UST) against their deployed Ether Collateral and earn liquidity mining rewards.
StakeWise is an Eth2 staking service whose goal is to help users get the highest possible return on their operations through the combination of staking, yield farming, low fees, and a unique tokenomic structure that enables compound staking.
We just released an ETH2 reward compounding interface
StakeWise users can now reinvest directly from the dashboard and increase their APY through monthly compounding.
No other protocol offers that ☝️ pic.twitter.com/9iSJFCkqHG
– StakeWise (@stakewise_io) July 30, 2021
Interested parties can pay Ether into the StakeWise Smart Contract and in return receive sETH2, which means “ETH”. Rewards for the deployed assets are paid out in rETH2, which is “Reward ETH”, and both sETH2 and rETH2 can be exchanged for Ether on a one-for-one basis.
These assets can also be transferred to any Ethereum wallet or exchanged for other tokens, allowing token holders to access the equity held in their deployed ether while earning staking rewards.
The StakeWise protocol allows anyone with at least 0.001 ETH to participate in staking via the StakeWise pool, while larger token holders with at least 32 ETH can use StakeWise Solo, a non-custodial staking service where the user has the public part provide their payout key and blocks of 32 ETH so that StakeWise can create and manage validators on their behalf.
The current APR offered for staking under the StakeWise protocol is 5.64%. Rewards generated through the StakeWise Pool are charged a 10% commission, while StakeWise Solo users are charged a fee of 10 Dai per validator per month.
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For users who are not entirely up to date with the ins and outs of decentralized finance – or simply prefer the more traditional custody path – some of the leading centralized exchanges in the ecosystem have started offering Eth2 staking services to traders on their platforms.
The leading options currently available to users in the United States are Coinbase and Kraken, number two and number two, respectively.
The main disadvantage for users looking to wager their Ether with any of these options is that their wagers are illiquid, meaning they cannot trade their tokens or access the value in them until the Eth2 network is fully started .
Kraken currently offers an annual staking reward of 5% to 7% depending on the rules of the Ethereum Protocol and charges an administration fee of 15% on all rewards received.
We have reached 800,000 ETH 2.0 staked on Kraken!
That’s over $ 1.8 billion in ETH securing the beacon chain
Since launch, we’ve distributed over 25,300 ETH ($ 58 million) in total rewards generated by our customers using ETH 2.0.
Put your @Ethereum in https://t.co/K5waYvklKj pic.twitter.com/AR23ys6YNK
– Kraken Exchange (@krakenfx) July 26, 2021
The current APR offered by Coinbase is 5% after a 25% commission has been deducted. While neither Kraken nor Coinbase offer any type of insurance for stuck ethers, Coinbase has promised to cover any losses that occur if its validation obligations are not met.
Overall, the top staking options available to Ether holders offer an APR of 5% to 7% and a minimum commission fee of between 10% and 25%. Compared to the less than 1% savings rate offered by most banks in a rapidly increasing dollar supply that is losing value every day, ether staking could soon become the preferred savings account and passive source of income for cryptocurrency advocates.
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