While Bitcoin (BTC) remains the dominant cryptocurrency, Ethereum (ETH) is towering over the competition in another domain as its staking market capitalization (the total value of staked tokens across the network) is more than twice larger than that of its closest rival Solana (SOL). This gap will keep broadening as more and more people are joining the trend, wanting to become ETH validators and earn solid rewards for their contribution to the integrity of the underlying blockchain. The appeal of ETH staking is so powerful that the overall value of locked tokens renews the all-time high each passing week.
There are three ways to begin staking Ethereum and earn interest on your crypto holdings that would otherwise lie idle, waiting for the bull market that may begin in a month or two years; no one really knows.
Self-staking or independent staking. As the name suggests, those who go down this road do everything on their own, which means installing and running three pieces of software, making sure that there's minimum downtime, and actively participating in the network's governance. This approach grants full control over validator nodes and enhances decentralization, but demands technical proficiency and consistent attention to node maintenance. It's a fully autonomous staking experience that offers direct participation in the blockchain ecosystem. However, if you aren't tech-savvy or can't spare time to manage the node, you may encounter penalties such as slashing that could make a big dent in your ETH stake.
Liquid staking. This approach requires lower knowledge and involvement compared to self-staking. In a nutshell, you are entrusting your crypto savings to a provider in exchange for derivatives like wrapped tokens - wrapped ETH (WETH) in our case. While this simplifies the staking process and enhances liquidity, it introduces a layer of dependency on third-party platforms. The wrapped tokens may represent your staked assets, The wrapped tokens may represent your staked assets, but, in reality, they don't have the same utility value as the native token. While they maintain a peg to the staked asset, discrepancies can occur, impacting their value and functionality. This discrepancy introduces an additional layer of risk and potential challenges for users, and in the worst-case scenario, stakers in liquidity pools may even face the possibility of losing all of these tokens, which ultimately means the loss of the stake in ETH. Moreover, liquid staking providers usually charge high fees for their services, further diminishing the potential returns for participants.
Non-custodial staking. The term 'non-custodial' means that you have full control over your private keys, which equals to unfettered control over your stake in ETH, while delegating the staking process to a third-party platform like CryptoStake. This approach allows comprehensive participation in Ethereum staking without exposing your assets to the custodial risks associated with centralized exchanges and liquid staking platforms. Non-custodial staking offers the most balanced solution, combining the benefits of network participation with the reassurance of maintaining ownership and control over your cryptocurrency holdings—an especially vital aspect in an industry still lacking regulation. Therefore, whether you are a retail investor or a crypto whale—someone not inclined to dedicate a significant portion of time to node management—non-custodial ETH staking emerges as the optimal choice as it ensures a more accessible and user-friendly experience.
Across the industry, Ethereum staking rewards may fluctuate between 2.89%, as offered by CryptoStake, to the highest around 8% on liquid staking platforms. However, a crucial caveat exists: the actual rewards rate from independent staking (network reward) often mirrors that of CryptoStake. Higher reward rates are frequently tied to marketing strategies or paid in wrapped tokens with all their potential downsides.
Then again, by opting for higher yields than the network provides, you give up control over your private key, hence the safety of your capital. This trade-off raises a critical question: Is the pursuit of potentially higher rewards worth the inherent risk to the security and ownership of your assets? It becomes paramount for investors to carefully weigh the allure of increased yields against the potential compromises in security and control.
So, why are ETH staking rewards lower than, for example, those offered by other Proof of Stake blockchain like Polkadot or Cosmos? There are several reasons for that. Ethereum, as a leading blockchain platform, prioritizes security, decentralization, and a cautious approach to economic changes. Decentralization, however, becomes an issue as certain liquid staking platforms currently control a significant portion of staked assets, forcing people at Ethereum Foundation to consider the higher validator limit to avoid further centralization. This, in turn, contributes to maintaining lower rewards rates to prevent an excessive influx of potential validators.
The constantly growing total staked volume, the ongoing upgrades, and a commitment to maintaining a diverse network of validators all contribute to the deliberate choice of setting comparatively lower staking rewards. This strategic decision aligns with Ethereum's long-term vision and focus on network health rather than optimizing solely for lucrative reward rates.
All in all, Ethereum indeed doesn't provide the highest profit compared to other Proof of Stake coins, but that is compensated by the opportunity to contribute to the development of potentially the most impactful blockchain that could one day overcome Bitcoin's dominance. On top of that, Ethereum is one of the safest blockchains, highly resistant to hacks and vulnerabilities. Its robust ecosystem, rich in decentralized applications (DApps) and smart contracts, positions it as a frontrunner in the evolution of blockchain technology, offering stakers not just financial rewards, but a chance to be part of a transformative and secure digital future.
As already mentioned, CryptoStake is a non-custodial provider that offers a fair ETH staking APY of up to 3% as of the time of writing. To begin staking with CryptoStake, follow these simple steps:
Download the App: Start by downloading the CryptoStake mobile application, available on both the App Store and Google Play.
Create an Account: Sign up and create an account within the app. This process involves writing down and storing in a safe place a seed phrase, and creating a password. No other personal information is passed to CryptoStake, ensuring your security and privacy. Additionally, CryptoStake has incorporated biometric security for an extra layer of safety.
Access Ethereum Validator: The CryptoStake app grants users easy access to an Ethereum validator. Once again, it's not a staking pool - with CryptoStake, you become a genuine Ethereum validator. Each user is assigned a unique validator ID, making tracking across multiple platforms seamless.
Utilize Rewards Calculator: Evaluate your potential profits with CryptoStake's accurate rewards calculator, assisting you in making informed decisions about your staking strategy.
Staking Wallet Functionality: The app serves as an Ethereum staking wallet, allowing users to send and receive crypto on the go. Staking rewards are conveniently allocated to this wallet.
Meet Staking Threshold: Ensure you have a minimum of 32 ETH to meet the standard staking threshold required for access to the validator maintained by CryptoStake.
Unstake Period: Understand that the unstake period is set at 9 days to prioritize the safety of your staked assets.
By choosing CryptoStake, stakers not only benefit from competitive ETH staking APY but also enjoy an array of additional features that make the staking experience seamless and secure.
Moreover, to assist users in navigating the complexities of tax reporting related to staking rewards, CryptoStake offers tax assistance. Users can rely on CryptoStake's tools and support to streamline their tax reporting process, helping them to stake Ethereum safely and stay in compliance with tax authorities.