Hodling Ethereum? How and where to profit from your ETH without having to trade
Options for earning passive income with Ethereum continue to accelerate and expand.
Last week the cryptocurrency scene had a new development that brought many expectations, with the Ethereum network going through its “Hard Fork”called London, also known as “Ethereum Improvement Protocol 1559” or "EIP-1559", which included some changes in the transaction fee market.
The London update is the latest in a series of changes that are part of Ethereum's transition from its proof-of-work (PoW) consensus model to a proof-of-stake (PoS) model, known and dubbed “Ethereum 2.0 (Eth2)”.
In Eth2, tokenholders that have at least 32 Ether (ETH) can operate in a validator node and verify transactions on the network. With the current price of Ether trading close to $2,700, the initial cost of running an Eth2 validator node is $86,400, which is too high a price for most market participants.
To help combat this problem of extremely high values, some options have been created such as “staking pools” and “centralized exchange staking”, which have emerged to offer all holders of Ether tokens the opportunity to earn an income in your tokens.
Some of the top options currently available to Ether holders are:
Lido
Available for Ether holders, Lido allows its users the possibility to place their tokens and, at the same time, access and consult their assets, being a liquid PoS solution for Ethereum. Protocols allow users to earn rewards without locking assets or having to maintain infrastructure if they were to operate in a pool.
Through the platform, users can bet their Ether without the requirement of a minimum deposit, with a current “APR” of 5.4% after deducting the rewards rate. In exchange for Ether held, users receive stETH, which can be moved and traded freely.
Total value blocked in the Read protocol. Source: DeFi Llama
According to data from DeFi Llama, Lido is currently the highest-ranking Ethereum stake group and the eleventh largest Decentralized Finance (DeFi) protocol by total amount blocked, with a total of $3.26 billion in amount currently blocked in Read protocol.
In the process of expansion, the Lido's maximum stake capacity is increasingly increasing, all thanks to an initiative by the “Anchor” protocol community to list “bETH” (a form of “stETH” in the Terra blockchain). This process exists as a form of guarantee on the Anchor platform, which allows users to dock to borrow TerraUSD (UST) against their staked Ether guarantee, as well as earn liquidity mining rewards.
Stakewise
It is an Eth2 stakeout service whose aim is to help users get the maximum possible yield on their properties through a combination of stakeout, agricultural production, low fees and a unique tokenomic structure that allows for composite stakes.
Platform users deposit Ether into a smart contract called “StakeWise” and in return receive “sETH2”, also called “bet ETH”. Rewards for wagered assets are paid in “rETH2”, called “ETH reward”, and thus both ”sETH2” and “rETH2” can be exchanged in a one-to-one ratio for Ethereum. The holders of these assets are free to transfer to any Ethereum wallet or exchange for other tokens, it is also possible to access the equity held in their Ether staked and, while they can earn player rewards.
The “StakeWise” protocol allows anyone with at least 0.001 ETH to participate in stakeout via the “StakeWise Pool”, while those with at least 32 ETH can use “StakeWise Solo”, another category of non-custodial stakeout service, where the users provide the public portion of their withdrawal key and 32 ETH blocks for the “StakeWise” protocol to create and manage validators on their behalf.
Centralized Exchanges
For users who are not knowledgeable about the world of decentralized finance, or prefer a more traditional custody route, some centralized ecosystem exchanges have started offering Eth2 staking services on their platforms. The main options available are “Coinbase” and “Kraken”, ranked globally as number two and four, respectively, based on 24-hour trading volume.
The main disadvantage for users who wish to use these platforms and bet their Ether is that their bets will be illiquid, meaning they will not be able to trade their tokens or access the contained value until the Eth2 network is fully launched.
Kraken currently offers a 5% to 7% annual wagering reward, depending on the Ethereum protocol rules, and charges a 15% administrative fee on all rewards received. Coinbase, on the other hand, offers an APR of 5%, after deducting a 25% commission.
One thing the two platforms have in common is that they don't offer any insurance on the Ether wagered, although Coinbase has promised to cover any loss that occurs should its validator responsibility fail or not be fulfilled.
Generally the main staking options currently available to Ether holders offer an APR range of 5% to 7% and charge a commission rate of between 10% and 25%.
Resources:
https://defillama.com/home
https://twitter.com/LidoFinance
https://twitter.com/stakewise_io
https://twitter.com/krakenfx
https://twitter.com/coinbase
https://cointelegraph.com.br/