Are you holding ETH and looking for ways to get the most out of it? You will be glad to know that there are more and more solutions that facilitate Ethereum staking at a user level. Stay and find out what your possibilities are when it comes to staking Ethereum safely and securely.
As you may already know, Ethereum is one of the most popular open source programmable blockchains to date, which supports smart contracts and allows developers to launch decentralized applications, known as DApps.
As with Bitcoin, Ethereum uses a Proof-of-Work consensus mechanism. However, to make it a more scalable, more secure and more sustainable network, Ethereum is upgrading its consensus protocol to Proof-of-Stake. The final user won't notice any difference, but it's important to remember that there won't be a second Ethereum 2.0 network, nor will there be two distinct blockchains coexisting.
How to contribute to Ethereum: ETH Staking
As explained in our article on Proof-of-Stake, staking is the main element that PoS networks use to secure their network. In Ethereum, although the upgrade is not yet complete, the PoS consensus module is ready on the Beacon Chain, and more and more validator nodes and delegators are joining every day to secure the network.
One of the main requirements of ETH staking and one of its main challenges is the amount of ETH required to stake. Staking on ETH was initially available only through setting up a validator node, which should have exactly 32 ETH as stake. As for the funds, they are locked once the node is deployed until the Ethereum Merge phase and the Shanghai upgrade were completed. Taking this into account, a person who wants to stake Ethereum should have approximately $55,000 at the current price of ETH.
In view of these disadvantages, several solutions have emerged to make it easier for users to participate with small amounts of ETH, and even unlock their liquidity so that they can continue to earn passive income without being tied to the staking lock condition.
How to stake ETH: options
Nowadays, there are several ways to stake Ethereum, stay around and we'll tell you which one best suits your needs:
Run your own validator
If you have the technical knowledge and financial means to run your own 32 ETH validator, then you can run it from home and start validating on the Ethereum network. In case you don't want to deal with hardware, there are staking-as-a-service options, where you delegate the hard part to an external service. Either way, the rewards would be distributed to you directly from the protocol and your funds would be in your custody: your validator, your keys! However, this solution is not very accessible due to the economic and technical requirements involved.Participate in a staking pool
If you don't have 32 ETH or if being a validator is not in your plans, you can join forces with other users and participate in an Ethereum staking pool. These pools allow you to stake any amount of ETH using your own wallet, without having to deposit your funds in a CEX.
Ethereum staking pools make it easier for users with lower purchasing power to participate in ETH staking without having to meet the 32 ETH minimum required, while unlocking the liquidity of their staked ETH by giving them a synthetic token equal to the value of the staked ETH plus the rewards earned. In this way, they can count on these tokens to be used as collateral in DeFi applications, for example, while their value continues to increase thanks to the staking rewards.
What is Lido Finance?
Lido is a protocol based on a liquid staking solution for non-custodial liquidity pools that allows you to stake ETH without meeting the minimum of 32 ETH required, and most importantly, without managing a complex infrastructure on your own.
As mentioned above, their solution allows you to take advantage of both the staking and DeFi systems. When you delegate your ETH, you will receive in return the synthetic token stETH, which is equivalent to the value of your initial staking deposit plus the daily rewards you generate.
One of the main advantages of staking with Lido is that not only do you generate ETH staking rewards, but you also unlock the liquidity of your staking tokens to maximise your ETH profits.
How does ETH staking work in Lido?
When staking ETH with Lido, your tokens are sent to Lido staking smart contracts. For extra security, the node operators validating on Lido don't have access to the funds delegated to these smart contracts, so there is no way for them to withdraw the funds. What they do have is a public validation key that allows them to stake on behalf of users.
These funds are sent to the staking pool contracts to be distributed between node operators, including Stakely! The staking pool contract contains information about node operators, their keys and the logic of the rewards distribution. These node operators are the entities responsible for managing and maintaining ETH validators, which means they are the ones who actually manage Ethereum's staking.
In practice, you will receive 1 stETH for 1 ETH staked, so you can use your ETH to continue maximizing your profits in DeFi, for example using them as collateral in lending, futures...
As for withdrawal, there is currently no way to remove a validator node that has staked 32 ETH due to the lock-up period, but there is a way to withdraw your staked ETH if you do it through Lido. If you want to swap your stETH back to ETH, you can do it at any liquidity provider, such as Curve, AAVE, or Balancer. Take a look at the ETH ecosystem to explore your possibilities.
Ethereum staking guide: how to liquid stake ETH on Lido
Next, we will move on to explain how to stake Ethereum with Lido step by step.
- Install MetaMask extension and create or import your wallet
First of all, you will need to have the MetaMask extension installed for your operating system. You can create a new account, import an account from seed or connect your Ledger device (with the MetaMask Ledger application installed and open). Follow the MetaMask instructions to create your wallet and never share your seed phrase, keep it in a safe place.
- Connect your MetaMask wallet to Lido platform
Go to Lido, click on Connect wallet and connect your MetaMask wallet. You can now view your balances.
- Stake your ETH
Enter the amount you want to delegate and press Submit. Under the Submit button, you will find detailed information about the stETH tokens you will receive in exchange for your ETH, the cost of the transaction and the fixed 10% commission deducted from your rewards. Once you press Submit, you will have to confirm the transaction in your wallet extension.
- Get the most out of your stETH
Congratulations! Once completed this tutorial, you will have successfully staked your ETH tokens with Lido and your staking deposit will have been distributed between the active set of validators. Once you finish your delegation, you will find your stETH tokens in your wallet representing your staking tokens, with which you can keep making profit.
If you prefer, we have an ETH staking tutorial on our Youtube channel where we will guide you through the process, step by step.