In a significant announcement on the last day of the G7 summit, President Joe Biden took a firm stance against the protection of “wealthy tax cheats and crypto traders” while potentially jeopardizing food assistance programs.
“I’m not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistants at risk,” declared the President, sparking a critical conversation about economic fairness and digital currency regulation in the midst of a challenging economic climate.
At the time of writing, Bitcoin’s price continues to fluctuate at lower levels following President Biden’s remarks on cryptocurrency.
Biden’s remarks underscore a growing concern about the implications of cryptocurrency usage and the potential for tax evasion by high-income individuals. His comments also shed light on the potential risks to the underprivileged, particularly those dependent on federal assistance programs.
The U.S. government is tasked with forging an agreement by the deadline of June 1st
As the June 1st deadline approaches, the U.S. government faces the pressing challenge of reaching a consensus. With the prospect of a shifting financial landscape on the horizon, the global financial community, inclusive of Bitcoin investors and traders, is preparing for potential market shifts.
The pending debt ceiling decision, coupled with Biden’s recent remarks, underscores the extensive influence of U.S. economic policies on worldwide financial systems, including the burgeoning digital currency markets.
US President Joe Biden’s communications director, Ben LaBolt, will reportedly be restricted from handling matters related to any cryptocurrency or technology firms he previously represented, according to an April 22 Bloomberg Law report. However, he will be allowed to advise on the president’s approach to regulating cryptocurrency and social media companies.
LaBolt was previously a partner at Bully Pulpit Interactive (BPI), a communications firm that had 23 clients paying fees exceeding $5,000 in a year. These clients included decentralized exchange UniSwap, venture capital firm Andressen Horowitz, and companies such as Meta Platforms, Shopify, and West Street.
In a public financial disclosure report published on April 21, LaBolt disclosed owning $50,001-$100,000 in Bitcoin and $15,001-$50,000 in Ethereum 2. However, he will be barred from “participating in legal matters, investigations, or contracts involving cryptocurrency or technology firms he previously represented.”
These restrictions are in line with the ethics rules followed by senior White House staff. Despite the restrictions, LaBolt will be allowed to advise on crypto regulation.
This move comes after Biden signed an executive order (EO) on digital assets on March 9. The EO outlined an interagency process that will involve 16 high officials, initially starting with the task of producing an elaborate series of reports. These reports are due at intervals ranging from 90 days to over a year from the publication of the EO.
While the EO did not specify any regulatory actions, it attracted attention from government officials and industry leaders alike. Republican “Crypto Senator” Cynthia Loomis of Wyoming praised the administration’s growing interest in digital assets.
Ari Redborn, head of legal and government affairs for blockchain-based intelligence firm TRM Labs, said that he was “expecting certain things and the positive tone was not necessarily one of them.”
The move to restrict LaBolt’s handling of matters related to crypto firms may be seen as a way to ensure ethical behavior in the White House. This move is in line with the Biden administration’s focus on transparency and ethical governance.
It is worth noting that this move may also affect LaBolt’s former clients, such as UniSwap and Andressen Horowitz. It remains to be seen how this move will affect their business dealings with the White House.
Overall, this move highlights the growing interest in crypto regulation by the Biden administration. With the interagency process set in motion by the EO, it is likely that the US government will take a more active role in regulating the crypto industry.
The Biden administration is set to order government agencies to propose crypto regulations within weeks.
The order is intended to develop a regulatory framework as a matter of national security.
The memorandum will task bodies to keep innovation in mind while still tackling issues like illicit activity.
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President Joe Biden’s administrationhas plans to task various federal agencies with regulating crypto assets as a matter of national security. The executive order is expected within weeks.
Biden to Task Agencies with Proposing Crypto Regulations
Cryptocurrency regulation is an important component of national security, according to the Biden administration.
Per aBarron’ssource, the White House will order government bodies to conduct analyses on digital assets including cryptocurrencies, stablecoins, and non-fungible tokens for the purpose of creating a regulatory framework. According to the source, the administration’s goal is to take a holistic look at crypto assets in order to “develop a set of policies that give coherency to what the government is trying to do in this space.”
The White House, nevertheless, has no plans to issue recommendations of its own but rather would require government agencies to put forth their own proposals, for which the White House would synthesize and bring together.
TheBarron’ssource emphasized the administration’s desire for the “harmonizing” of regulations, particularly globally and between nations since “digital assets don’t stay in one country.”
Many parts of the government are set to be involved, including the State Department, Treasury Department, Council of Economic Advisers, National Economic Council, and the White House National Security Council.
The current lack of consensus on varying issues (e.g. what constitutes a security) is something the Biden administration seeks to address.
PerBloomberglast week, though, the administration’s focus is not only on issues like digital currencies being used for illegal activities or the overall, but rather on the systemic impacts crypto assets might have. In fact, the White House also seems keen on allowing the U.S. to be at the forefront of the growing space’s innovation.
Regulators in the U.S. have already been interacting with the digital asset subject recently. Congress had colorfulhearingson stablecoin regulation last month, as well as hearings on the environmental impact of cryptocurrencies only last week. Meanwhile, The Federal Reserve finallyreleasedits long-awaited central bank digital currency report on Jan. 20. Other nations, though, are taking different approaches, with the Bank of Russia flirting with a crypto ban and top EU regulators urging a Proof-of-Work mining ban.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
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The Biden administration is reportedly expected to take sweeping action on the digital asset space in the weeks ahead.
According to a new Bloomberg report, a number of unnamed insiders reveal that senior administration officials plan to unveil an executive order that will provide details on the regulatory, economic and national security risks posed by digital assets.
The executive order will also task various government agencies to submit reports in the latter half of the year.
The Financial Stability Oversight Council is one group expected to offer insights in the coming months, with the possibility of the State Department and the Commerce Department being consulted as well.
The White House is also likely to discuss the possibility of supporting a central bank digital currency (CBDC), which would be a digital asset backed by the US government.
Just last week, the Federal Reserve released a long-anticipated report on the feasibility of issuing a CBDC in the United States.
The Fed report says,
“A CBDC could potentially serve as a new foundation for the payment system and a bridge between different payment services, both legacy and new.
It could also maintain the centrality of safe and trusted central bank money in a rapidly digitizing economy.”
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During an MSNBC interview, Hillary Clinton continued to suggest hypothetical scenarios in which cryptocurrencies could destabilize the United States and called on the Biden administration to regulate them as she fears that state and nonstate actors manipulate the role of the U.S. dollar.
Related Reading | Inverse Signals: Why Bitcoin Weakness Is Attributed To Dollar Strength
Clinton warned people are only beginning to see the need to regulate the cryptocurrency markets and called to imagine “the combination of social media, the algorithms that drive social media, the amassing of even larger sums of money through the control of certain cryptocurrency chains,”
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The former presidential candidate has already voiced her unamicable views around cryptocurrencies before, seeing them as a threat for the United States.
Likewise, for Clinton, the nations of China and Russia are manipulative obstacles for the country.
We are looking at not only states, such as China or Russia or others, manipulating technology of all kinds to their advantage, we are looking at nonstate actors, either in concert with states or on their own, destabilizing countries, destabilizing the dollar as the reserve currency.
Clinton thinks that the Biden administration needs to address many questions regarding the role of cryptocurrencies in the U.S. nation and its economy, but added they might not have much time to do so.
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The Former Secretary of State hopes that the current administration will try to operate “exactly” in the way she thinks best based on what she has been “hearing from them”, meaning their views regulations match her hostility.
We certainly need new rules for the information age, because our current laws, our framework, it is just not adequate for what we are facing.
Is The U.S. Marching Towards More Crypto Hostility?
Last week, the Former Secretary of State made a similar warning during the Bloomberg New Economy Conference, where she stated that crypto represents a risk for the stability of the U.S. nation and currency (the U.S. dollar).
Clinton believes the “interesting and somewhat exotic effort” of crypto mining can undermine the role of the dollar and seemed to consider full-ban on cryptocurrencies similar to China’s:
It appears as though China is going to prevent outside technology payment systems, like the cryptocurrencies development, from playing a big role inside China. I think they recognize, giving their nationalism, perhaps earlier than other nations, that this could be a direct threat to sovereignty.
On the other side, Senator Pat Toomey had voiced back in September that the China ban was an advantage for the United States and tweeted his own opinion on the upside of innovation and economic liberty, which Hillary Clinton still fails to approach.
Beijing is so hostile to economic freedom they cannot even tolerate their people participating in what is arguably the most exciting innovation in finance in decades. Economic liberty leads to faster growth, and ultimately, a higher standard of living for all.
Furthermore, Jerome Powell has just been renominated as U.S. Federal Reserve Chair to face the accelerating inflation and other challenges the nation’s economy is facing. Powell has been warry around cryptocurrencies, but he has also stated he would not opt for a ban, but regulatory controls on stablecoins.
Related Reading | Bitcoin Heads Towards $35,000 as Biden Stimulus Hurts US Dollar
Crypto total market cap at $2.5 trillion in the daily chart | Source: TradingView.com
Issuers of stablecoins like Tether (USDT) and USD Coin (USDC) may soon be required to work under the same regulations as banks, but that seemingly doesn’t frighten the CEO of the USDC-issuer Circle.
Commenting on the Biden administration’s proposal to work on a bank-like regulation for stablecoin issuers, Circle CEO Jeremy Allaire took a supportive stance for the recommendation. He highlighted that proposal’s aim to regulate dollar stablecoin issuers in the United States financial system as banks at the federal level by the Federal Reserve represents significant progress for the industry’s growth.
Allaire noted the current steps would upgrade the current money transmission-focused regulations “to a much more fundamental infrastructure at the core of what potentially the future of banking and capital markets look like.”
“There’s a real recognition that as these payment stablecoins grow, they could grow at internet scale relatively quickly,” Allaire commented. When the stablecoin market grows into the hundreds of billions in circulation and trillions in transactions, the risks to financial markets and financial stability become much more significant, he added.
Related:Acting CoC Hsu: More crypto regulation is needed
As Cointelegraph reported, the Biden administration’s proposal aims to create a new “special-purpose charter” for stablecoin issuers, putting them in the same category as banks. Allaire believes that the details on a bank charter for a crypto company might need to get worked out over time with both the FDIC and other agencies that oversee banks.
Stablecoins have become a central talking point for regulators. In September, the U.S. Treasury reportedly conducted several meetings to examine the risks of stablecoins for users, markets or the financial system.
President Biden’s new agenda could expand how capital gains taxes apply to crypto assets.
Included in H.R. 5376, also known as the “Build Back Better” bill, is a clause that would amend the Constructive Sale rule to apply to cryptocurrencies and other digital assets.
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The Constructive Sale rule was created in 1997 to prevent investors and hedge funds from taking advantage of a loophole in the law that allowed them to lock in investment gains without having to pay capital gains taxes, according to Investopedia.
Constructive sales are defined as making short sales against identical or similar properties and then entering into futures contracts that call for the same property to be delivered.
Currently, according to U.S. Code 1259, the Constructive Sale rule only applies to appreciated financial positions, which are defined as “any position with respect to any stock, debt instrument, or partnership interest if there would be gain were such position sold, assigned, or otherwise terminated at its fair market value.”
The proposed legislation would amend this clause by adding the words “digital assets” after “debt instruments,” meaning that crypto investors would no longer be able to skirt capital gains taxes by making constructive sales.
The new law would take effect as soon as the bill is passed, and would only apply to contracts signed after its enactment.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Resistance is mounting to U.S. President Joe Biden’s reported plans to tap a staunch banking and crypto critic to run the Office of the Comptroller of the Currency (OCC).
The proposed nomination of law professor, Saule Omarova, to head the federal bank regulatory agency has raised eyebrows in political and financial circles as she is widely seen as anti crypto and anti big banks.
Texas Republican Senator Ted Cruz has become the latest crypto ally to speak out, claiming that her decisions, if nominated, could change the future of the industry in a tweet on Sept. 28.
“Not only is Saule Omarova, Biden’s pick to lead the OCC, a threat to our traditional economy, she also wants to regulate crypto into oblivion. Crypto faces future-defining government regulations. This nomination needs to be stopped.”
A number of big banks and banking associations are also against the nomination with the American Bankers Association debating whether to publicly fight the decision. ABA President and CEO Rob Nichols said “we have serious concerns about her ideas for fundamentally restructuring the nation’s banking system,” in a statement on Sept. 24.
Ranking Republican on the Senate Banking Committee, Pat Toomey, also spoke out in opposition of the nomination last week stating that he has “serious reservations” given her “extreme leftist ideas.”
President and CEO of the Independent Community Bankers of America, Rebeca Rainey, said that Omarova “would displace locally-based community banking and restrict economic growth in local communities,” according to reports.
The OCC oversees America’s banking giants such as Goldman Sachs, JPMorgan, and Citi Group and would also encompass aspects of the crypto industry.
Omarova, who has previously said she wanted to “end banking as we know it,” is expected to enforce stricter rules. She has also claimed that the rise of cryptocurrencies is “benefiting mainly the dysfunctional financial system we already have.”
She shares views with anti-crypto lawmakers such as Senator Elizabeth Warren in that digital assets threaten to destabilize the economy, according to Bloomberg. For her part, Warren stated that the nomination was “tremendous news,” and looked forward to heavier regulations.
Related:New OCC head requests review of cryptocurrency rules
The OCC has morphed from one of the Treasury’s most crypto-forward agencies into one that changed direction under subsequent leadership. Former head of Coinbase’s legal team, Brian Brooks, joined the OCC in March 2020 and paved the way for legislation allowing banks to custody crypto.
In January, the banking regulator told national banks that they could run independent nodes for distributed ledger networks such as stablecoins. However, then the tone changed. On Sept. 21 acting head of the OCC, Michael Hsu, warned that decentralized finance products are similar to those that catalyzed the global financial crisis in 2008.
The Biden administration plans to counter the use of cryptocurrencies during ransomware attacks by imposing sanctions.
The U.S. Department of the Treasury plans to hit unnamed targets with sanctions as soon as next week, rather than disabling entire sections of the blockchain infrastructure where fraud is suspected to occur, according to the Wall Street Journal.
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The department also plans to release a new set of guidelines advising businesses about the risks involved in making ransomware payments.
At a White House briefing earlier this month, Deputy National Security Advisor for Cyber and Emerging Technologies Anne Neuberger said that Americans and businesses must take active steps to prevent being victimized, even as the state rolls out regulations.
“We continue to see successful attacks occurring against vulnerabilities for which there are patches, so we want to use the opportunity of this pressroom and the attention that it gets to ask Americans, to ask organizations, to [take] the steps they need to… be safe online, even as the government focuses on its efforts.”
In July, the Biden administration announced it would more rigorously trace crypto payments made to hackers after major meat supplier JBS and Colonial Pipeline were scammed out of millions of dollars.
These regulatory actions come on the heels of a poll that showed most American cryptocurrency owners suport government regulation as a means to combat ransomware attacks.
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Biden’s proposed tax law has spooked all markets, not just crypto. Experts suggest, however, that the pull back will be short-lived.
After last weekend’s flash crash, both Bitcoin and Ethereum have traded sideways until finally revisiting new lows on Thursday.
This week’s to-do list shows users three ways to stake and earn lucrative returns on ETH 2.0 with minimal capital.
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This week’swNewsunpacks the implications of Biden’s aggressive tax proposal.
Like any politician worth their polyester suit, they’re master negotiators. And rarely do negotiators get everything on their first attempt. Aiming high, however, means that the middle ground will be far more enticing, thanks to an optimistic ask.
Many experts suspect this is precisely what the Biden administration is doing.
Still, the mere idea of a hefty bump in the United States’ income and capital gains taxes has already sent investors running. The S&P 500 dropped 0.9% on the news, trailing behind many high-growth tech stocks. Tesla, arguably this cycle’s biggest winner, dropped nearly 3%.
Crypto was no different. BothBitcoin and Ethereumshed a portion of their Q1 gains. Neither asset nor the broader market has fully recovered yet either.
Long-term holders are unfazed by the news. And for those interested in putting their diamond hands to the test, this week’s to-do list offers readers three ways to earn interest in staking their Ethereum.
Tax rates are irrelevant if you never sell.
— Avichal Garg – Electric Capital ⚡💸 (@avichal) April 23, 2021
All that and much more below.
Biden’s Bull Market Bid
On Thursday, market participants were throttled bynewsthat the Biden administration sought to nearly double the capital gains tax in the United States. Specifically, the proposal would draw a higher percentage from citizens earning more than $1 million.
Capital gains taxesare those that investors pay on the profit made from selling assets. There are both short- and long-term capital gains, with the longer-term tax being much lower. The rules can vary from country to country and state to state.
The current capital gains tax rate for America’s wealthy individuals is 20%. If one throws in the additional 3.8% tax which funds Obamacare, the President’s new plan would bump the new rate to a whopping 43.4%. This hike would be thefirst of its kindsince 1993.
A unique market environment has, however, called for unique solutions. Just as the government has been working hard to curb the economic woes of a pandemic, it now needs to collect on all that money printing.Mati Greenspanof Quantum Economics told Crypto Briefing that:
“Though some Congressman seem to be warming up to digital assets, the government as a whole seems to be less excited about the gains being made in all risky markets and are now looking to enforce a bigger cut for government programs. Bitcoin was invented exactly for this reason.”
As the proposal has yet to hit the senate floor, investors quickly scooped up their gains from this cycle’s heady bull run. Cashing in now means locking in the current tax rate, regardless of the proposal’s viability.
In this sense, the selling pressure likely comes from a demographic that does not have a long-term thesis behind their investments. That, or they don’t expect their favorite growth stocks to continue growing.
Bobby Ong, the co-founder and COO of CoinGecko, told Crypto Briefing:
“We might see investors use this opportunity to take profit from the bull market, leading to a larger pullback on crypto. We might also see a narrative change from growth stocks to value stocks. Investors might take this opportunity to take profit from the bull market while technology stocks that have been receiving great fanfare might see some pullback due to the same reasons.”
There are other derivative effects of the tax proposal beyond rotating out of tech stocks and crypto. With higher taxes in the United States, some pundits have said that talent will flow elsewhere.
Ong, however, reminds that “Silicon Valley is still located in the United States,” adding:
“With higher capital gains tax, some capital will probably flow out to other countries but it remains to be seen whether that is a good enough reason for talent to move. Though this might be irrelevant to crypto-investors as the majority of them do not have physical offices and work remotely.”
Biden’s tax plan has sparked discussions not only around long-term bets and talent flight but also one of the oldest trades in finance. Cash-strapped investors not interested in liquidating their assets may use those assets as collateral to take out loans. This move does not activate any additional taxes.
Various lending and borrowing services suddenly look much more interesting. While many users are only interested in the high yields offered by lending assets, few retail investors have thought deeply about borrowing against their holdings. This strategy may soon enjoy more popularity given the latest tax plan.
The managing partner and co-founder of Nexo,Antoni Trenchev, has even suggested that Biden’s plan may even be “a strategic prelude to pro-crypto legislation in the U.S.”
Nexolets qualified users put up collateral on 18 different cryptocurrencies and earn a direct line of credit linked to their bank. With over $12 billion in assets under management, Trenchev said that Biden’s proposal might boost that figure “should his proposal to raise taxes for wealthy investors go through.”
A variety of decentralized options leverage the same strategy. Ong said:
“Several DeFi lending protocols have seen great adoption such as MakerDao, Compound, and Aave. A new-comer, Alchemix has made a splash recently by introducing self-payable loans without the risk of getting liquidated. I do foresee more DeFi users being more comfortable with taking loans, and now with the high capital gain tax, there are even more reasons to use it.“
Market Action: Bitcoin (BTC)
On the night of Apr. 17, the crypto market witnessed an intense crash taking out$10 billion in liquidations. Bitcoin dropped 14% to lows around $51,000 as altcoins took a deeper dive.
Despite the relief rally to $55,000 earlier this week, Bitcoin’s price failed to overcome resistance from the 50-day moving average.
The price dropped again to lows of $47,500 late Thursday following Biden’s plans to increase the capital gain tax. Weekly expiration of options contracts could have also influenced today’s drop.
Nonetheless, the price is edging close to the exit price of traders betting on higher prices.
Short-term traders will be looking for support from the 128-day moving average at $45,000. A breakdown below the 200-day moving average at $35,000 threatens to end the long-term bullish trend.
Source:Trading View
The total correction from the peak of $65,000 shows 26.5% on the meter.
Moreover, there was a crucial difference between last weeks’ flash crash and Thursday’s 8.6% drop. On Thursday, the liquidation on the futures and swap market was only around $3.5 billion.
The lower volume of liquidations suggests that spot selling was responsible for the downward pressure, further hurting the probability of a pull-back.
For the first time in this bull market, the CME futures quotes are also in backwardation. The futures price of July’s contracts is trading at $49,000, lower than the rate for May and June.
The funding rate for futures and swaps on crypto exchanges is currently neutral.
The monthly expiration of$2.5 billionin options contracts is due next week. The maximum pain point for option contract buyers is $56,000.
Market Action: Ethereum (ETH)
Ethereum’s native asset has recorded a higher high consecutively for the last four weeks. This week the price reached an all-time high of $2,650.
The market has shown a stronger affinity for ETH rather than BTC. The ratio between ETH/BTC surpassed the yearly high of 0.0462 BTC, a level not seen since August 2018.
However, the ETH/BTC ratio dropped below the peak last week, facing resistance at that point. The middle and support of the parallel range are at 0.0395 BTC and 0.034 BTC.
Source:Trading View
The options market, a proxy for institutional investors, also shows a higher penchant for Ethereum than Bitcoin.
1) Option flows supporting the BTC/ETH ‘rotation’.
ETH May 2.6-3k Strike Calls bought (bullish bias), but on the approach to BTC 53.5k support, observe May7 60+62k Strike Calls sold x500 and May28 50k Strike Put x400 bought (protective/bearish bias).
BTC diffident.
ETH robust. pic.twitter.com/6E5rCDdlnh
— Deribit Insights (@DeribitInsights) April 22, 2021
Ethereum currently demands 13.8% of the crypto market’s dominance, while Bitcoin continues to lead the market at 49.1%, according toCoinGeckodata. The beta value of Ethereum is still high.
The beta value is the number of times the price of ETH changes concerning Bitcoin’s rise or fall.
Therefore, continued correction in Bitcoin threatens to drag ETH below $2,000 as well. If the downfall continues, previous lows of $1,950 and $1,550 will act as support.
Crypto To-Do List: Stake ETH
There are now over4 million ETH stakedin the ETH 2.0 deposit contract. Ethereum’s Proof-of-Stake upgrade has been anticipated for years, with recent signs suggesting that it could ship before the end of 2021.
Staking ETH helps secure the Ethereum protocol, but it also presents an opportunity to capture generous yields.
With Ethereum 2.0 on the horizon, many services have emerged, offering ETH holders a way to participate in staking. This list outlines three of the best options for readers.
ETH2.0 Deposit Contract
The most popular way to take part in staking is by depositing ETH directly to Ethereum’s deposit contract. Relying purely on the user rather than a third party, this is the most decentralized approach to validating the network.
However, several big drawbacks may not appeal to everyone.
Most importantly, staking directly through the contract requires 32 ETH. At today’s prices, that’s an outlay of about $73,000. There’s also a hardware cost, though a decent computer or ramp upgrade is relatively inexpensive compared to the ETH itself.
Staking independently also requires some degree of technical expertise. Stakers need to run an ETH 2.0 client, which must be downloaded. Once downloaded, the 32 ETH must be sent to the contract as one transaction.
As ever with crypto, any funds lost through mistakes are not recoverable.
Independent stakers also need to be aware of slashing, which can mean losing a portion of their holdings if their validator node breaks the network rules. In reality, slashing should only affect those who deliberately misbehave.
Staked ETH also gets locked up until Phase 1.5 of Serenity. In other words, if the price of ETH surges and stakers want to sell, they must wait.
According toJustin Drake’s estimates, staking could go live before the end of the year.
With 4 million ETH locked in the contract, rewards are currently around 7.8% APR.
Rocket Pool
Rocket Pooldescribes itself as a “decentralized Ethereum 2.0 staking protocol.”
As the name suggests, it works by pooling ETH to stake rather than requiring users to stake the full 32 ETH. Instead, users need only deposit 0.01 ETH to participate in staking (Rocket Pool also allows deposits of 16 ETH to run independent nodes.)
Rocket Pool stakers receive rETH in return, a tokenized staking deposit that represents the deposit and rewards.
The rETH token can also be used forliquid stakingacross DeFi, allowing stakers to maximize the yield earned on their holdings.
Unlike the ETH 2.0 deposit contract, there’s no minimum lockup period.
Lido
Lido works similarly to Rocket Pool: users deposit ETH and receive liquid stETH while taking. There’s also no lockup period or minimum deposit requirement.
Lido staking interface. Source:Lido
Lido is also integrated through Curve, SushiSwap, and 1inch. These integrations mean that users can stake the derivative stETH on these platforms for additional yield.
At the time of writing, Lido had received 251,549 ETH, making it one of the most popular staking services.
Factoring in Lido’s fee, the current reward rate is 7.2% APR.
Ankr
Ankr is another service that operates a similar model to other staking pools. When users deposit ETH, they receive aETH in a 1:1 ratio plus any future staking rewards.
Stakers can redeem rewards ahead of Proof-of-Stake shipping and before the end of the staking lockup period.
aETH holders can provide liquidity on Uniswap, SushiSwap, Curve, SnowSwap, BakerySwap, Yearn Finance, and OnX Finance to start earning extra rewards.
The rewards earned vary depending on the pool the tokens are deposited in.
An overview of staking ETH with Ankr Staking!
This is what we aim to do with StakeFi in the future on other chains as well!#StakeFi https://t.co/Bn2MUkbM96 pic.twitter.com/8ffjWIDM23
— Ankr (@ankr) March 25, 2021
Overall, staking is one of many ways to earn yields in DeFi. With Ethereum’s Proof-of-Stake upgrade on the way, there are now many ways to earn from staking ETH. While running an independent validator node is by far the most popular option, it carries several risks.
It’s important to note that many independent validators have greater than 32 ETH, so their risk factor is somewhat lower.
For less experienced DeFi users with smaller holdings, liquid staking pools are an excellent alternative option to participate.
Nonetheless, caution is advised when participating in any staking activities.
Earning yield through established protocols like Aave or simply holding ETH in a cold wallet to benefit from its potential price upside arguably carries less risk while still giving Ethereum believers a chance to capture the network’s upside potential.
Disclosure: At the time of writing, some of the authors of this feature had exposure to ETH, AAVE, CRV, BTC, UNI, DPI, and POLS. Ankr and Nexo are Crypto Briefing sponsors.
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