Newcomer in the ETH staking game
The Ethereum Merge is upon us. It’ll mark a shift from Proof of Work (PoW) consensus to Proof of Stake (PoS). By staking ETH, holders can participate and earn rewards from the validation process rather than miners.
The Ethereum Foundation launched the beacon chain in November 2021, enabling ETH holders to kickstart the PoS chain, which will be merged with the Ethereum mainnet on September 15, 2022.
To set up a staking node, you require 32 ETH (worth ~$52,000), technical know-how, and the ability to manage the risk of penalties on the network. This can be challenging. Thus, pooled staking solutions are the only way for an average Joe.
Currently, the pooled staking niche is small and concentrated among centralized exchanges and decentralized alternatives like Lido. It has a lot of room for growth, allowing new players to capture value. Today, I will talk about one such decentralized application, Swell Network, where you, as an ETH investor, can potentially earn a free airdrop by being early.
Ethereum’s Staking Landscape
The Ethereum validator unit is considerably smaller than its competitors. Only 11.31% of ETH’s total supply is staked on the beacon chain. This staking ratio is far below competitors like Solana and Cosmos, with 76.8% and 66.14% of circulating supply staked, respectively. Plus, it is concentrated among a handful of entities.
Staked ETH distribution: 31% in centralized exchanges, 32% in liquid staking protocols, and the rest in self-run nodes, or other pooled solutions. Source: Dune.
Liquid staking solutions like Lido are particularly interesting because they unlock liquidity for stakers by giving a token that derives value from the staked ETH, for instance, Lido’s stETH. The stETH token can be used in DeFi protocols like Aave or Yearn Finance for additional yields. So far, Lido has led the space due to its first-mover advantage with around 95% of the decentralized liquid staking market.
Coinbase recently also launched a wrapped staked ETH (cbETH) to mimic the liquid staking design. As the Ethereum PoS network expands post Merge, it will likely provide opportunities for Lido and Coinbase competitors to grow. Swell Network is one of them.
A New Player
Swell Network aims to provide higher staking yields for users by automating the DeFi yield generation process at the protocol level itself. It is backed by leading crypto VCs and angel investors such as Framework Ventures, Apollo Capital, Mark Cuban, Bankless founders, and Kain Warwick of Synthetix. This ensures sustainable development and a decent scope of gaining market popularity.
The network kickstarted with an initial launch on August 24, enabling deposits on the platform. And because we’re early, you have a potential opportunity to earn a free airdrop from the project.
The team plans to allocate around 4% supply to early plans. Source: Swell Network.
According to the community leads on Discord, the token launch announcement may come sometime before September 19. By depositing a small amount of ETH now, you can likely qualify for the airdrop.
Depositing ETH on Swell Network entails no investment capital. However, there might be some technical mishaps, causing you to lose your ETH. However, such situations are largely unexpected.
To begin staking, go to https://app.swellnetwork.io/, and deposit ETH on the staking page.
Given the market opportunity, strong backing, and promise of higher yields than competitors, it has a decent chance of attracting ETH liquidity and gaining popularity in the future. Now, you have a risk-free way of getting exposure.
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