ETH2.0 has steadily promoted how ordinary users can participate in staking?

Decentralized finance (DeFi) has become one of the most popular topics for discussion in the encryption field, with dozens of new projects being launched every month. In its essence, DeFi applications.

On December 1st last year, the long-awaited Ethereum 2.0 (Beacon Chain, Phase 0) was released. Phase 0 accepts users 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.

V God announces Ethereum upgrade on social media

Participating in Ethereum 2.0 pledge is to participate in the network by locking ETH in a smart contract. After ETH is locked, users become validators and can be rewarded by confirming blocks. 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 resources. The verifier locks the tokens in the wallet to run a special node.

The 5 stages of Ethereum 2.0 upgrade

Phase 0: The beacon chain is online, and the PoS mechanism is implemented

Phase 1: The shard chain is put into use

Phase 1.5: Convergence of PoW mechanism and PoS mechanism

Phase 2: Ethereum account upgrade

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

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

Before starting, there are a few important things that need to be explained in advance:

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

The pledge cannot be redeemed until the upgrade is completed (this may take 1-2 years). You need to wait for a small upgrade after the mainnet and beacon chain are merged before you can withdraw funds.

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

The following will introduce one by one three ways that ordinary investors can participate in pledge.

Participate through the staking pool

The staking pool is an intermediary that provides services to investors with less than 32 ETH. It pools the ETH of these users for mortgage, and distributes the pledge rewards according to the ETH shares held by the users. The storage method of assets in the pledge pool is decentralized, transparent, and protected by smart contracts. The pledge pool will charge a pledge fee, and some services have restrictions on users who deposit a small amount of ETH. Most staking pools release token versions of staking-locked ETH, such as rETH (issued by RocketPool, users can exchange for rETH after staking ETH). These ERC-20 tokens not only represent the ETH held by users, It also represents the pledge income that users will get. These tokens can be represented by the same symbol or name, but if they are not issued by the same pledge pool, they are different assets with different liquidity. The following table lists several staking pools that are currently used more by users. (Users can participate through the platform.)


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 staking amount limit, users need to hold at least 0.5 ETH, equivalent to about 1589 US dollars. The APY pledged by Ankr is 9.64% (data on August 4). However, Ankr will charge a 15% fee for all pledge rewards. It uses this money to build infrastructure and issue synthetic assets aETH (if the user does not intend to continue Once you have 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 Ankr, as long as 0.01 ETH, which is approximately $31. Like Ankr, Rocket Pool provides users with a tradable synthetic asset rETH. The APY of Rocket Pool is 9.8% (data on August 4), and a 10% service fee is charged, but if you hold more than 16 ETH, no commission is charged. Calculated in this way, if a user pledges 1 ETH through Rocket Pool, the daily income will be $0.42.

Participate through the exchange

In fact, compared to the pledge pool, there is an easier way to participate in ETH2.0 pledge: participation through an exchange. Investors only need to register or use an existing account, withdraw coins or buy ETH, and pledge. The interface of the exchange is clear, beautiful and 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.

Ouyi 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. The mining revenue will be issued in the form of BETH according to the amount of pledge on the chain and the lock-up time. After the Ethereum 2.0 mainnet goes online, users can exchange back ETH 1:1 according to the amount of BETH held. Based on the on-chain rules of Ethereum 2.0, pledged funds will be locked for 1-2 years and cannot be redeemed in advance, but BETH can be flexibly returned. ETH2.0 mining revenue is dynamically adjusted according to the amount of locked positions on the chain, and the annualized rate of return is expected to be between 4%-20%. Currently , the return on holding BETH is 6.14%.

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

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

Find “Earn Coins/DeFi” on the homepage of the APP, click to enter the Earn Coin page, drop down, select “ETH” in the “Hold Coins”, and click the “Subscription” button of “ETH2.0 Locked Mining”. Participate in ETH2.0 lock-up mining with one click.

Participate through the ETH lending platform

The ETH lending platform is a balanced choice between pledge and the ability of locked ETH to borrow tokens after pledge. It is suitable for investors with higher 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 obtain income through pledge and retain the ability to trade, invest or hold liquid assets. LiquidStake integrates customers’ encrypted assets and transfers them to major staking service providers. Users can obtain loans (corresponding encrypted assets) from the first moment of staking ETH.

Let’s take a look at the specific figures. Investors pledged on the LiquidStake platform will get 9.86% APY, but need to pay a 14.91% handling fee. In addition, the USDC loan obtained by the investor is equivalent to the value of the pledged ETH. Therefore, according to the yield data on August 4, betting 1 ETH, the user can get 0.4 USD per day.

What is the profitability of pledges?

Finally, it should be noted that the verifier’s income will be affected by the total amount of pledged ETH. Based on the total amount of pledged ETH, the annual return of validators is approximately between 2% and 20%. The profit that investors get from the pledge is not high, but it is relatively stable and the risk is low.

The more the total ETH pledged, 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 the pledge method you choose and keep in mind that the price of ETH fluctuates greatly. Therefore, in addition to gains from pledges, 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 make a rational analysis yourself.

Posted by:CoinYuppie,Reprinted with attribution to:
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