After years of testing and development, the "Merge" has successfully enabled Ethereum to shift from Proof of Work (PoW) to a more efficient consensus mechanism - Proof of Stake (PoS). This has paved the most important way for Ethereum's future expansion plans, and also allowed DeFi to have its own crypto-native yield tool - now ETH can be used to protect the blockchain in exchange for stable returns.

In traditional finance, income-generating assets will generate huge markets, and the Staking track, which has crypto-native yield tools, will also give Ethereum a larger ecosystem.

The upcoming Shanghai upgrade means that this year, liquidity staking is an important narrative for Ethereum and the entire crypto space. Ethereum Liquid Staking is a new development trend that allows users to unlock their staked ETH to gain liquidity and use it in the DeFi ecosystem.

Active staking ecosystem

Active pledge ecosystem

Ethereum staking is a key feature in PoS Ethereum, which allows users to stake (lock) a certain amount of 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 to strengthen the security and scalability of the Ethereum network.

Currently, the largest market share among liquid staking products is Lido Finance (stETH), which is not only the leading liquid staking protocol, but also one of the DeFi protocols with the largest TVL. On the Lido platform, users stake ETH at a 1:1 ratio in exchange for stETH, which can be deployed on other platforms such as Yearn and Aave, thereby improving users' capital efficiency.

In summary, there are currently four ways to stake ETH:

1. CEX/Fully Custodial: Using the exchange’s staking solution, there is no need to create verification keys and withdrawal keys. Fund management and node operations are completely completed by the exchange, which belongs to the fully custodial model.

2. Pooled Staking: For example, the Staking solutions of Lido and Rocket Pool. Users do not need to create verification keys and withdrawal keys. Node operations and fund management are completed by operators in the large pool. It is a near-full-custody model, but the large pool solution provides more operating space.

3. SaaS (Staking as a Service): Staking services are provided by third-party service providers. You need to create verification keys and withdrawal keys yourself, but the operation of the nodes and fund management are completed by the third-party service provider. This is a non-custodial model.

4.Solo type: You need to purchase hardware and set up nodes by yourself, manage verification keys and withdrawal keys by yourself, which is a completely decentralized model.

Bullish staking landscape

Bullish pledge pattern

Since the Ethereum merger, the total amount of ETH has been reduced by more than 38,000 through burning, with an annual inflation rate of -0.07%. In addition to conventional DEX, ETH transfers, stablecoins, and wallets, NFT applications have also become active in the past 30 days.

Institutions have been buying BTC and ETH, and one of the reasons for the recent improvement in the market may be that multiple funds and institutions have invested nearly $1.6 billion in liquidity in the cryptocurrency market.

From the perspective of ETH stakers, most of the ETH prices involved in staking are concentrated in the range of US$2,500-3,500, and only about 21.1% of the ETH prices are below US$1,600.

From the perspective of principal and interest, that is, the staked ETH principal + the rewards obtained from staking, 59% of the stakers are still in an "underwater" state, that is, the current ETH price is lower than the price when they staked. Stakers are generally optimistic about the Ethereum network in the long term and participate in staking during the bull market cycle, so it is unlikely that they will choose to withdraw the staked ETH after the Shanghai upgrade.

Data source: Dune

Since most ETH stakers are at a loss, there is little economic incentive to sell ETH at current prices. About 2 million ETH was staked at a price between $400 and $700, representing the earliest stakers in December 2020. Since liquid staking was little known at the time, most of this ETH is illiquid.

The Shanghai upgrade will eliminate liquidity risks and uncertainties during the lock-up period, and the group most directly affected will be impulsive short-term investors.

The Shanghai upgrade will transform ETH from "long-term lock-in" to "current income", which may attract a large number of new participants and bring a certain amount of potential buying pressure to ETH, especially when ETH has long-term appeal to institutional investors.

Good staking prospects

Good pledge prospect

So, what are the prospects for Ethereum staking? Ethereum staking typically offers returns between 5-8%, which is more attractive than most traditional investments. This makes it a reliable source of income, especially in the current bear market.

In addition, through staking, more future expansion plans of the Ethereum network can be implemented. This will accelerate the development of decentralized applications and thus increase 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 more prominent. In general, the prospects for Ethereum staking are very optimistic, which can provide stable returns and improve the security and scalability of the Ethereum network.

Ethereum staking protocols are a growing space in the cryptocurrency world. Since Ethereum liquidity staking protocols are an open market, competition is growing. This means that users can choose from more options and get more competitive interest rates and better services.

Competitiveness of SaaS

SaaS competitiveness

Among the many Ethereum staking solutions, the most noteworthy one 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 ETH Staking. Users only need to deliver it to the mining pool to enjoy automated Staking services without having to deal with tedious technical details and management. This is very friendly to ordinary users.

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 provide better services, such as improving the security and stability of nodes, reducing the risk of penalties for Staking, etc.

Finally, SaaS solutions can also promote the development of decentralization. From a technical perspective, mining pools cannot touch user funds and only provide operation and maintenance services, which is conducive to the decentralization of Ethereum nodes. This means that users no longer need to choose pools with a high network share, resulting in "super-large nodes". These measures will help promote the decentralization of Ethereum.

In general, the SaaS model, as a convenient, secure, reliable and scalable staking solution, has a very broad development prospect and will also provide more users with opportunities to participate in staking.

Ebunker is a representative SaaS service provider recently. Ebunker adopts a non-custodial model. Unlike other custodial staking pools, Ebunker does not touch or manage users' funds, which means that users can fully control their assets. Users interact directly with the official Ethereum staking contract and do not need to let a 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 manage their own private keys independently, avoiding the risk of user funds being infringed by third parties. 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 at any time, so every execution layer and consensus layer reward is completely transparent and directly corresponds to the transactions on the chain.

Of course, although the SaaS model has many advantages, it also has some shortcomings, that is, it cannot provide LSD solutions. Because in the SaaS model, the user's private key is completely managed by the user himself, and the third-party service provider cannot directly handle the user's funds, so it cannot issue LSD. This 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.