Will Ethereum’s entry into the 2.0 era bring about a new wealth effect? ​​Start by understanding ETH2.0 staking first

As a major upgrade of Ethereum, the launch date of Ethereum 2.0 was determined after the number of validators’ stakes exceeded the set value, that is, on December 1, Ethereum will officially enter the 2.0 era. However, due to the high difficulty and other reasons, Ethereum 2.0 will be implemented in parallel in stages, and the most recent one is called "Phase 0".

In other words, this public chain project, which has a market value second only to Bitcoin, a super high adoption rate, and a strong developer community, is likely to bring about a new wave of wealth effects . It is not too late to seize the opportunity now, starting with understanding ETH2.0 staking first...

Why participate in ETH2.0 staking?

1. What is ETH2.0 staking?

ETH2.0 staking can be understood as an upgrade of the original mining method of Ethereum 1.0, which is the same as Bitcoin. In the past, mining was done by buying a mining machine, connecting to the Internet, and supplying electricity. However, due to the change in the "consensus mechanism", ETH2.0's "mining" is no longer like before, where you compete for computing power to obtain the right to process transactions. Now you only need to run a program uninterruptedly on a networked machine, and then this program is responsible for verifying "activities" such as transactions by the system. In this way, when there are hundreds of thousands or even millions of "nodes", a large number of transactions can be processed through technical means such as "sharding".

Of course, if we no longer compete in computing power, how can we ensure that the "nodes" under the control of different people can be honest, stable, and not do evil? That is staking. Each node must deposit 32 ETH as a deposit to run the verification program and obtain the corresponding "reward ". The system punishes dishonest, unstable, or even evil nodes to ensure that most nodes in the entire network can operate reliably.

2. Benefits of participating in ETH 2.0 staking

As the most important part of ETH 2.0, participating in staking and running a validator node client will definitely bring rewards to yourself and the network. At present, there are at least the following benefits:

a) Stable income

In order to encourage more people to participate in ETH 2.0 staking and achieve a balance to ensure network security, the current setting is that the fewer people stake, the higher the yield, ranging from 21.6% to as close to 4.9%. In other words, the yield is between 4.9% and 21.6% . In the early stage, most people expected that the yield of ETH staking in Phase 0 might remain at around 10%.

In fact, at first glance, this rate of return is not high compared to some current DeFi liquidity. But in fact, the return is proportional to the risk. With a 20% return from liquidity mining, you need to consider the risk of impermanent loss and the security of the principal, and the risk is relatively high. The ETH2.0 pledge contract and program have undergone multiple rounds of audits, and the security is very high. It can also remain relatively stable and has a large volume. Even if the bottom return is 4.9%, it is already very attractive compared to many traditional financial interest rates, not to mention the interest rate of ETH pledged on MakerDao. Therefore, this rate of return is still quite attractive for those who pursue stable returns.

b) The appreciation of ETH itself

As DeFi continues to prosper, more and more ETH will be locked and pledged, and the amount of ETH2.0 pledged will also rise rapidly. As the market circulation continues to decrease and the demand continues to rise, the price of ETH itself will naturally be pushed up. " The biggest risk is not being able to hold on " has been verified countless times on Bitcoin. Participating in staking may be a good way for ordinary people to participate in the ETH wealth feast.

How to participate in ETH2.0 staking and maximize profits?

Since Ethereum 2.0 validator staking can only be done in units of 32 ETH, no more and no less , and most users do not have a technical background and may not be able to complete the deployment and stable operation of validator nodes on their own, this is bound to give birth to a huge validator staking market.

As the details of staking are continuously disclosed, many institutions and developers are gearing up to enter this field. Therefore, for most people, there is no need to worry about how to deploy validator nodes. Just like the cloud computing power of Bitcoin mining, you only need to provide ETH staking, share some profits with other people, and leave it to professionals.

1. Common ETH2.0 staking methods

a) Directly participate in running the validator node yourself. Simply put, in addition to depositing 32 ETH as per the steps, you also need to purchase a cloud computing server from a cloud computing service provider such as AWS, which costs between $5 and $20, and then deploy and run the validator node client according to the deployment instructions. This requires certain technical knowledge and the responsibility of ensuring the security and stability of the operating environment. b) Participate in staking through solutions provided by wallets, trading platforms, staking service DApp projects, etc. through third-party assistance . These providers provide corresponding solutions for the needs of the majority of crypto investors who cannot run the verification node themselves, do not want to stake 32 ETH at a time, and are also able to issue staking rights tokens to release liquidity. All participants need to do is choose a suitable solution, deposit Ethereum, and then pay a portion of the proceeds (deducted by the service provider) as a service fee in proportion.

2. How to maximize profits

For most people, the best option is to maximize returns while ensuring the safety of funds. After scanning some of the ETH2.0 staking solution providers that have appeared on the market, we have seen that some institutions have already "given big profits and rewards". For example, Whale Exchange, which recently announced "an exclusive subsidy of 20% annualized for 100,000 ETH", caught our attention:

a) Exclusive 20% annualized subsidy On November 25, Whale Exchange officially announced that from now until December 1, Whale Exchange will provide an exclusive subsidy of 20% annualized for the first 100,000 ETH. Simply put, the funds pledged to the ETH2.0 deposit contract before the launch of the beacon chain on December 1 cannot be calculated for income. This part of the idle period will be subsidized by Whale Exchange according to the highest annualized income of 20%. b) Triple income returns are more generous and more secure In fact, most of the solutions provided by staking service providers are similar, but from the official announcement of Whale Exchange, in addition to the services provided by everyone, it has two additional incomes, plus staking income, a total of three incomes: staking income, liquidity mining income, and market making income. How is the triple income achieved? Is it high? It is understood that in addition to providing staking income and services that everyone has, Whale Exchange will also anchor the received ETH staking funds to issue staking rights Token: iETH, which is also a staking rights tokenization solution for releasing staking liquidity that is also provided in a few solutions (it is estimated that the time required to stake ETH to run a node by yourself is as long as 1.5-3 years). This iETH Token can be freely traded and transferred . At this time, through the popular social DEX YiFu IFSWAP, you can conduct liquidity mining for trading pairs such as iETH/ETH and iETH/USDT to obtain IFC Token income and market making fees. At the same time, YiFu IFSWAP can flexibly set the asset ratio in the liquidity pool. For example, the iETH/ETH liquidity pool ratio can be set to 80:20, which means that compared with the traditional 50:50 pool, market makers only need to provide 1/4 of the paired assets, which better improves the efficiency of asset utilization. Simply put, after the pledged rights are tokenized, they can not only circulate freely to release liquidity, but also participate in liquidity mining to obtain DEX platform tokens and enhanced income from transaction fees (similar to participating in liquidity mining of designated trading pairs of Uniswap to obtain UNI rewards and market-making fees), so as to maximize the benefits.

c) Bear Slash penalties (the principal will not be lost)

In addition, Whale Exchange also bears the Slash penalty losses caused by unstable operation services . Many users are very worried that if they run their own nodes or stake through a hosting service provider, and the verification node is unstable due to machine failure and offline, and the Ethereum system fines them, the fee may be deducted from the escrowed ETH staking income, leaving the user to bear this risk and cost. Whale Exchange directly promises that if there is a penalty, it will be borne by the platform itself, and users can get theoretical benefits without worrying about this risk.

summary

Bitcoin represents blockchain 1.0, while Ethereum represents blockchain 2.0. Ethereum 2.0 is the optimal solution that almost all crypto enthusiasts and institutions have been waiting for for a long time, and its future prospects are naturally beyond words. Unlike many projects, Ethereum 2.0 was not completed overnight, but was implemented in stages to ensure the best of all aspects, so that we have enough time to prepare and participate in a new "wave" and new opportunities.

Fortunately, facing the various seemingly difficult conditions required for Ethereum 2.0 staking, "there are always more solutions than problems". ETH2.0 staking solution providers such as Whale Exchange have brought us more and more stable returns and more full asset utilization, while also lowering the threshold and risk, which is undoubtedly a good choice.