Ethereum will completely transition from mining into staking when The Merge takes place in ~Q3/Q4 2022. This could attract more people to stake Ethereum as they rush to cash in on the projected 9% APR yields (that’s after the merge and if you stake independently). But investors need reliable solutions to earn from Ethereum staking. As it currently stands, there are many solutions on the market, but enterprise-grade staking is the only solution that’s fully non-custodial and delivers a complete stack of rewards.
In this guide, you’ll find out why you should stake Ethereum the non-custodial way.
What is Ethereum Staking?
Ethereum Staking means locking up 32 ETH for a particular period to secure the network. People who stake are known as stakers or validators. Besides securing the network, validators also process transactions, add new blocks to the chain, and store data. They also earn a reward for staking their ETH.
Staking Ethereum is possible due to the introduction of proof-of-stake (PoS) by the Beacon Chain. The network will fully transition to PoS when the Beacon Chain merges with the Ethereum mainnet. This event will be called The Merge and is part of the Ethereum 2.0 upgrade. The switch to PoS will make Ethereum more environmentally sustainable, reducing the network’s energy consumption by ~99.95%. That’s because Ethereum staking power consumption is not as energy-intensive as mining. Stakers only need a home computer or smartphone.
Why Should You Stake Non-Custodial?
Running your own node is rather technical because you have to work with hardware, cloud infrastructure and software to complete the setup. This is where enterprise-grade staking solutions like Launchnodes come in. They cut out the technical complexities of running a node, making it easy for people to stake Ethereum at scale. But that’s not the only benefit of using a non-custodial enterprise-grade staking solution. Here are more advantages:
MEV and Inclusion Fee Rewards
Staking ETH to secure the network is rewarding. Validators earn block rewards in the form of newly created ETH coins. Also, rewards depend on how much ETH you’ve staked. Hence you’ll make more if you stake more. Note that each validator node requires 32ETH, so the more validators you run, the more yield you receive.
After The Merge, validators will start earning transaction fees previously awarded to miners. That means they’ll profit from high gas fees, which contrary to popular belief, will not decrease with the shift to PoS. Currently, miners also earn priority fees, also known as inclusion fees. Users pay priority fees (tips) to incentivize miners to “prioritize” their transactions. Inclusion fees will also shift to validators after The Merge.
Miner extractable value (MEV) is the lesser-known source of income for stakers. Miners presently enjoy MEV rewards, which will still exist when validators take over. Traders on decentralized exchanges (DEXs) care about the speed of their transactions and the order in which they’re added to the blockchain because it could determine whether they make or lose money. Therefore, validators stand a chance to earn from such instances. By understanding how DeFi protocols work, validators can identify arbitrage opportunities within and among DEXs to gain from MEV.
It is important to note that MEV will be distributed automatically, which means that you won’t have to do a thing, in order to receive it as a stand alone validator.
Non custodial staking providers can keep and trace their MEV and inclusion fees from their users, but custodial staking providers cannot technically do this. So, using a provider like Launchnodes means that you’ll keep 100% of your rewards.
Unlike custodial staking providers, non-custodial platforms don’t keep their users’ private and withdrawal keys. This ensures that your ETH remains safe in your wallet. It also gives you complete control of your rewards and full ownership of the staking infrastructure. Non-custodial staking is, therefore, the best way to experience Web3 and the benefits of decentralization.
With non-custodial staking, security is also boosted by the fact that you are not dependent on any third-party interfaces. Imagine if such an interface crashes or is hacked and you have no way of accessing your validator nodes. Secondly, with weak crypto firms crashing right, left and centre, it would just be wrong to depend on anyone who says trust me. Staking providers need to take the approach of getting customers to assume that their team have all been killed or dont exist anymore but their customers’ staking infrastructure and returns need to be unaffected. “Trust us” is not something a staking provider should ever say.
Staking at scale requires pre-synched Beacon nodes, cutting down the time users have to wait for their nodes to be synched and start running. In fact, one cannot just become a validator, as the node will require a beacon node to connect to, and it is a key point to keep in mind when choosing how to stake.
Once a beacon node is set up, it takes approximately 5 days for a beacon node to Synch.
Availability of Dedicated Beacon Nodes
Clients with multiple validator nodes should connect them to dedicated Beacon nodes that very few staking providers offer. Beacon nodes are a significant part of Ethereum staking as one of their jobs is to add and remove validators.
Launchnodes offer dedicated Beacon nodes and also advise clients on the best infrastructure to use, helping them prevent latency and maximize rewards. Clients also own the staking infrastructure when they use Launchnodes.
Geth node is a breakthrough
We have already established that beacon nodes are key, when running a large scale staking infrastructure. What many are not aware of, is that regardless of how many nodes you intend to run, current wait time to sync with the Ethereum blockchain is two weeks on a good day. This means that becoming a validator is not a one day endeavour and if you are looking for flexibility,speed and resiliance a pre-synced Geth node is the answer.
Not only does it reduce sync time down to a few hours, it also lets you run any client of your liking. Those who are in the know, are aware that the staking world is constantly torn by the need to decentralize. Prysm has been the most popular clien to datet, and it is something true decentralization purveyors are looking to change. Geth node allows you to run any consensus layer client more easily. This is a perfect solution not only to decentralization, but also to keeping your eggs (read ETH) in different baskets. This reduces the risk and cost of your Ethereum staking infrastructure.
High Uptime Levels
Staking is a crucial process that keeps the network secure while ensuring that transactions are being processed. As a result, a node cannot afford to go offline. If it does, a penalty is charged due to inactivity. Stakers may also lose a portion of their staked ETH through slashing if their nodes are improperly configured. To avoid these risks, you should use a non-custodial provider with a robust infrastructure that’s regularly audited to maintain high uptime levels. Launchnodes has a minimum uptime of 99.95%.
Custodial providers that supply other services besides staking may sometimes face outages. Hence using a non-custodial provider that’s solely focused on staking is advisable. At the end of the day, you don’t want to deal with a support team that’s there to protect their own business.
Total Control of the Environment
Custodial staking runs on the servers of the service provider. That means they are under the control of the service providers and not the client. However, non-custodial providers allow their clients to run their staking nodes in their own private cloud accounts, giving them total control.
You’ll Know What To Expect
Enterprise-grade staking providers supply service level agreements (SLAs), enabling their clients to know what to expect. An SLA is a contract between the service provider and the client detailing the services they’ll deliver. It also describes how clients can receive help when problems occur. With custodial providers, however, SLAs may not be part of the customer support package.
Enterprise-grade staking lives up to the goal of Web3 because it gives both individuals and organizations complete control of their rewards, private keys, and ETH. The crypto space no longer needs to rely on centralized providers since more and more reliable decentralized platforms are emerging, giving users a true Web3 experience. So, if you’re thinking about crypto staking, you may consider looking into providers that are fully non-custodial.
This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.
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