Shanghai upgrade is imminent. How to obtain ETH Staking benefits scientifically?

The Shanghai upgrade is imminent, and the liquidity staking track is hot. After the Shanghai upgrade, due to the opening of unstake, the magnitude and risk of de-pegs such as stETH will be greatly reduced, making it suitable for more users to participate.

This article will provide you with a detailed comparison of the advantages and disadvantages of various liquidity pledges, helping you find an ETH pledge interest-earning plan that suits you.

As shown in the figure above, overall:

• The yields of different companies are not much different, pure staking is about 4% -5%, AMM is about 7%, Frax currently has a certain early dividend;

• There is a huge difference in liquidity. For a slippage of 0.2% (half a month's pure staking income), stETH can sell 40,000, while bETH can only sell 10;

• In terms of decentralization and transparency, DeFi is significantly better than CeFi.

In addition to mining income, discount is also an important source of influence on yield and requires special attention.

Lido

It has good liquidity and multiple ways to play, making it the most universal and the best choice for users with large funds.

Since wstETH has been cross-chained to Op/Arbi, the Gas Fee has been greatly reduced, which is more friendly for users with small amounts of capital and entry-level users who want to try it.

Currently, stETH has a 1% discount, and it is recommended to buy it through 1inch.io (also applicable to L2). As mentioned above, beginners are advised to play with L2 first.

The underlying node operators of stETH are currently under the DAO approval system, which is completely transparent but requires permission, and there is room for improvement in decentralization. The protocol will also take a 10% commission to pay for the node operators and as treasury income, which is a relatively low ratio.

For more information about Lido, please refer to this article. You can also join the Lido Chinese community to discuss and ask questions.

Introduction to wstETH Arbitrum Ecosystem

Less gas fees and higher returns.

AMM:

• Balancer: https://arbitrum.balancer.fi

• Kyberswap: https://kyberswap.com/pools

• Curve (To Launch): https://arbitrum.curve.fi

Lend:

• Radiant(To Launch):https://radiant.capital

Option：

• Premia: https://premia.finance

• Dopex(To Launch):https://app.dopex.io/ssov

Perp:

• Mycelium(To Launch):https://mycelium.xyz

Rocket Pool

The feature is “no permission required”, everyone can become a node operator, users can use 16 ETH to build a node on the server, and the other half of 16 ETH is provided by non-node operating users.

rETH is suitable for people with cheap server resources, with returns up to 9%, because they can enjoy RPL rewards and share the rake of other users.

For non-node operating users, the protocol charges a 15% commission, which does not have any advantages in terms of yield and liquidity, but the degree of centralization is slightly higher.

Frax

It was only released at the end of 2022 and is in its early dividend period. The current yield is relatively high. The ARP of sfrxETH exceeds 7%, and the LP of Convex/Curve exceeds 10%.

However, frxETH has almost no discount, so it cannot benefit from the narrowing discount.

The frxETH protocol takes a 10% commission and currently does not pay any fees to node operators. It is suspected to be self-operated and its degree of centralization is slightly higher than the previous two.

In general, it is more suitable for users who are familiar with the Frax/Curve ecosystem and more professional DeFi users.

frxETH specific design logic

frxETH = stETH without staking rewards

sfrxETH = wstETH, plus the staking reward of frxETH.

The design of frxETH is very novel. When you deposit SETH into Frax, you will get 1 to 1 frxETH, which is the same as 1 ETH = 1 WETH.

In order to get the staking income, you must stake frxETH to sfrxETH. If only half of the people turn frxETH into sfrxETH, then sfrxETH stakers will get twice the income.

Let me take a look at Convex, you will find that the base vPAR of stETH-ETH is much higher than that of frxETH-ETH pool, why?

This is because LPs can also receive stETH staking rewards, which allows Lido to allocate fewer LDO rewards to achieve the target apr and liquidity.

Frax has a lot of CVX that can be used to bribe crv rewards, and as the algorithmic stablecoin narrative recedes, they may want to use CVX for other purposes. They can use crv rewards to replace staking rewards in Curve, which may be the reason why frxETH is designed to get staking rewards.

Coinbase

Originated from Coinbase's ETH 2.0 service, with a commission of 25%.

It is mediocre in all aspects and may be more suitable for institutions with US compliance needs?

There is also a certain Alpha even when the discount is large, so you can keep an eye on it.

Binance

You can get bETH by depositing it into Binance's ETH 2.0 service for staking. Currently, its secondary market has a discount of ~ 3%.

Binance is not transparent about its fees and underlying operators. The interface uses misleading wording such as "I have measured it to be about 4% and estimate its commission to be around 20%." There is also a high probability that the underlying network is entrusted to node operators such as Ankr, which are invested by the company and have a history of embezzlement.

Liquidity is scarce, 10 bETH is sold at 0.2%, and there are relatively few DeFi Lego. It is only cost-effective to buy at a large discount. Remember not to deposit directly, but buy bETH in spot.

In addition, in fact, most of the ETH that users deposited in CeFi institutions also participated in staking or liquidity staking, including Celsius, which absorbs ETH deposits and then operates them at will (due to liquidity issues, it is easy to get out of control).

This also includes Matrixport, which provides transparent products. In short, if you don’t do the pledge or liquidity pledge yourself, the institution that deposits the money will actually do this implicitly or explicitly.

Summarize

Yield (commission), liquidity, discount, and risk are the four elements of participating in liquidity staking. By reasonably comparing the four points of each company, you can find a solution that suits you.