A short guide to Ethereum staking services

A short guide to Ethereum staking services

In 2 to 4 days Ethereum will transition to the Proof-of-Stake consensus, which will give the power of adding new blocks (and earning their rewards) to the users who staked at least 32 ETH and became a Validator.

However, not everyone has $55k to lock for 6-12 months (until the Shanghai hard fork will authorize withdrawals). That is why a number of services, both centralized and decentralized, propose users to stake whatever amount of ETH they have, in exchange for a yield (coming from transaction fees).

So far over 13.6 million ETH (~$24.1 billion) have been staked on the Beacon Chain. Here’s a short overview of Ethereum staking via different services:

📌 Lido. Decentralized liquid staking platform with the biggest validator share (30%). Lido offers a 3.5% APY (annual percentage yield), and gives a stETH token equivalent of the staked amount -a sort of IOU which users can use in other DeFi protocols as collateral.

📌 RocketPool. A smaller (1% of validators) liquid staking DeFi protocol with up to 4.8% APR and rETH token.

📌 Coinbase. With 14% of the validators, Coinbase is the biggest centralized staking service offering 3.25% APY. However, it has been facing troubles with user trust, since Circle, which it backs, froze Tornado Cash-tainted USDCs. The wrapped Ethereum staking token cbETH, which it introduced last month, has been trading at 6-8% discount ever since.

Wrapped tokens are redeemable for a growing portion of staked ETH plus rewards and minus fees, which – theoretically – means that the longer it’s held, the greater its redemption value. So while rETH is trading with a premium of 3%, cbETH is proposed at a discount, which reflects a higher counterparty risk profile – or, in other words, users’ fear of seeing their tokens frozen if the US government asks Coinbase to. 

📌 Kraken (8% of validators). A centralized exchange offering 4-7% APY, with the deduction of 15% administrative fees.

📌 Binance (6% of validators). The latest platform to propose ETH staking, Binance went strong, proposing 6% APY without any fees.

📌 Solo staking is always the option too. Anyone can run an Ethereum validator node, depositing 32ETH in order to earn somewhere around 8–12% APY. However, if the number of validators increase more than the blockchain’s revenue (fees), these numbers will go down, and vice versa.

Happy staking !