Ethereum 2.0 Staking: Part 2

Let’s continue getting acquainted with the staking capabilities of the largest altcoin. In the first part of the article, we explained what Ethereum 2.0 staking is, what its profitability depends on, and what risks and penalties exist within the network.

Let’s break down the ways to profit from Ethereum 2.0 staking. 

To become a validator in Ethereum 2.0, you need to send 32 ETH to staking. In case there are more coins but less than 64, there will be no reward for staking. If there are fewer, then staking won’t be activated. 

There are two ways to participate in Ethereum 2.0 staking:

1. Self-staking. The main difficulty of this investment method is that it requires at least 32 ETH, equivalent to about $87,000 at the time of writing, and the coins will be locked before Ethereum enters Phase 2.
2. Joint staking. A way of combining assets to create staking pools. Along with the fact that any available amount of ETH may be suitable for this type of Ethereum 2.0 staking, there are security risks related to assets transferred to the pools.

Ethereum 2.0 Self-Staking

Remember, Ethereum 2.0 self-staking is only possible if you have at least 32 ETH. You need to run your node to delegate coins to ETH2 staking and make a profit. This process is technically complex and requires the investor to have certain knowledge and skills or to use specialized services.

Pre-Configured Validator Nodes

Special pre-configured validator nodes make creating an Ethereum 2.0 staking node easy. Using this kind of tool will simplify the process of running the ETH2 staking node, however, further maintenance and upkeep of the created validator will be completely up to the user.

Let’s take a look at some popular services of this type.

Avado

This service allows the creation of an independent Ethereum 2.0 staking node with the help of specialized equipment of its own production. Using setup wizards and having coins in multiples of 32 ETH, you can create more than 100 validators on one account.

Avado hardware supports automatic software updates to keep the Beacon Chain network running smoothly and get commission-free ETH2 staking rewards.

Launchnodes

Launchnodes, a non-custodial ETH2 validator, allows you to create your own staking node on Amazon Web Services (AWS). There is no need to buy additional equipment to work with the service. You can connect Launchnodes validator nodes to Beacon nodes on your own hardware.

Nodes created through the Launchnodes service operate in a secure AWS environment and are controlled only by the user. The service removes the technical complexity of ETH2 staking by performing configuration and ongoing management.

Launchnodes provides validator nodes that are secure and always active in the core Ethereum network, using the latest versions of the Prysmatic client.

Validator-As-A-Service

Another way to become a validator in the Ethereum 2.0 network is to use special services providing Validator-as-a-Service. Such services manage the validator node for a fee.

By providing virtual servers for Ethereum 2.0 staking, this service helps validators avoid the technical load on their own hardware. Staked, Stakewise Solo, and Blox Staking are the most popular services in this area.

Joint Ethereum 2.0 Staking

If the investor doesn’t have the required amount of ETH to start staking, it’s possible to pool capital with others willing to participate in creating an Ethereum 2.0 validator node.

Joint staking is the most popular way to make passive income on Ethereum 2.0 and is available in two common ways.

Staking Pools

Combining crypto-assets for ETH2 staking is done through special staking pools, which summarize investors’ available capital to create the validator node. Staking rewards are distributed in proportion to the amounts of ETH invested in the pool.

The service’s smart contracts coordinate the validator, so it’s a good idea to make sure your ETH are secure before delegating them to the pool. 

The pools enable staking using specialized ERC20 tokens — tokenized versions of ETH delegated to staking. These tokens are equal to the original Ethereum, and staking income is also paid in them. Tokens may have similar names, however, their liquidity will differ as different pools issue them.

The most popular services for pooling capital are:

1. Rocket Pool. The platform allows you to participate in the staking pool with a minimum amount of at least 0.01 ETH. Staking rewards are accrued in Rocket Pool ETH (rETH) liquid rate tokens. The staking yield on the platform is ~4.03% per annum. Payment for the platform’s services is within 15% of the rewards received.
2. Ankr Earn. The minimum amount for staking is 0.5 ETH. Rewards are charged in Ankr Reward Bearing Staked ETH tokens (aETHc). The commission of the liquid rate protocol is 15% of the profit. APY is from 4% to 7%.
3. StakeWise Pool. APR staking is 4.04% per annum. Any amount of ETH is sufficient to participate in the pool. Deposits in the service’s staking pools are tokenized in sETH2 (SETH2). Rewards are accrued in StakeWise tokens (RETH2). The service fee amounts to 10%.
4. Lido Finance. The platform offers the opportunity to participate in staking pools with any amount of ETH for delegation. The annual yield is 3.6%. Rewards are charged in Lido Staked ETH tokens (stETH), and the commission for using the service is 10%.

Staking on Exchanges

Staking on cryptocurrency exchanges is gaining popularity. The main reason is convenience — the functionality of major exchanges provides Ethereum 2.0 staking on the platform. 

The simplicity of crypto exchange interfaces is another advantage that makes investors choose them for joint staking. The benefits include exchanges’ reliability and reputation, making users willing to trust them with their funds. 

Due to the high competition, exchanges have to significantly reduce the number of fees to attract new users and even cancel them. However, to take part in Ethereum 2.0 staking through the exchange, you will still need to pay the validator fee.

The top exchanges for Ethereum 2.0 staking are:

1. Binance. The exchange offers tokenized Beacon ETH (BETH) assets for Ethereum 2.0 staking. The asset yield is up to 5.2% per annum.
2. OKX. Ethereum 2.0 staking yields on the exchange range from 6% to 20% per annum. The minimum rate is 0.1 ETH. Rewards are paid in Beacon ETH coins (BETH).
3. Coinbase. The expected yield from ETH staking on the exchange is 3.675% per annum. There is no minimum required amount for staking, and you can delegate any sum. Rewards will be accrued in ETH2 tokens.
4. KuCoin. The profitability rate for ETH staking on KuCoin Earn is 5.06%. The minimum amount to participate in staking is 0.01 ETH. Interest for staking is charged in ETH2 coins, which the exchange allows to trade freely in the ETH2/ETH pair.
5. Kraken. The yield is at a level of 4-7%. Rewards are paid in ETH2.S coins, enabling Kraken users to buy and sell staking positions in the Ethereum network. The exchange’s commission for staking services is around 15%.

The popularity of making passive income from staking the second most capitalized cryptocurrency is gaining momentum. The availability of this way of earning money on Ethereum 2.0 for users with different financial capabilities increases its popularity among the crypto community. Investors are attracted by the opportunity to multiply ETH. This is despite the fact that ETH allocated for staking will be unlocked only after the final completion of Ethereum’s transition to the PoS algorithm.