The Aave community has spoken, and the results are in. A proposal to launch the decentralized exchange (DEX) Aave on the zkSync Era Mainnet has received overwhelming support, with over 99% of AAVE tokenholders casting ballots voting in favor of the move.
The proposal, which was first pitched on March 26, outlined plans to launch the third version of the lending and borrowing protocol on the zero-knowledge Ethereum Virtual Machine (zkEVM). The launch will initially be limited to USD Coin (USDC) and Ether (ETH).
The proposal’s success in the “temperature check” stage means that the next steps listed in the proposal will be pursued. This will involve further discussion, followed by risk parameter evaluation and the finalization of the proposal. If successful, the proposal will then be submitted for on-chain governance approval.
While only around 0.02% voted against the proposal, and a further 0.02% abstained from voting, the overwhelming support from the Aave community is a significant milestone for the project. Deploying on zkSync has the potential to introduce new users to decentralized finance, as well as cementing Aave’s position as a premier borrowing platform within the zero-knowledge ecosystem.
The Aave community previously voted to deploy the Aave V3 codebase on zkSync’s v2 Testnet, which was approved in another off-chain vote. With this latest vote, Aave is another step closer to deploying on the zkSync Era Mainnet.
Aave is not the only decentralized exchange looking to leverage the benefits of zkSync. Uniswap is also set to launch on the scaling solution from Polygon after a successful governance proposal was passed.
Aave’s journey to this point has not been without its challenges. In November 2022, the platform changed its governance procedures after it was hit by a $60 million short attack that ultimately failed. However, the project has emerged from this setback with renewed vigor and determination, as evidenced by the overwhelming support for its latest proposal.
Overall, the launch of Aave on zkSync has the potential to be a game-changer for the decentralized finance space, and it will be interesting to see how the project progresses in the coming months.
Decentralized finance (DeFi) protocols have gained significant traction in the cryptocurrency sector, with a total value locked surpassing $271 billion, based on data from DefiLlama. One exceptionally popular category of DeFi services is that of decentralized borrowing and lending, where users can pledge their crypto as collateral and take out stablecoin loans (or vice versa) to pay for everyday expenses while their investment continues to grow.
Such protocols typically charge a spread or difference between deposit and lending rates as a service fee. But then there are protocols like Minterest that seek to distribute a vast majority, if not all, of their profits back to users. Earlier this month, Minterest launched on Moonbeam, an Ethereum-compatible smart contract parachain on the Polkadot network. During an exclusive interview with Cointelegraph, Minterest CEO Josh Rogers further elaborated on the goals of building a user-oriented DeFi platform.
We’re proud to be the only @MoonbeamNetwork-native protocol on that list, as well as the only lending/borrowing protocol. #DeFiTwoPointOh let’s go!
Thank you ducky for your impressive work in collating and keeping up with these statistics! https://t.co/twn0xAyoDo
— Minterest (@Minterest) November 17, 2021
Cointelegraph: Your firm claims to be the world’s first lending protocol that captures 100% of value from interest, flash loan and liquidation fees, which then get passed on to users. Would you care to elaborate on that?
Josh Rogers: Traditionally, what happens is that when you look at models, when you look at value capture, what you notice is that there are different parties who are beneficiaries. So, you are looking at lending protocols where the owners/developers take profits out. You have external liquidators who act as the third party who extract liquidation fees. And the thing to especially know about is flash loan fees, which may be extremely [inaduible] to the community in some way. But the thing to know about is that, that value capture fee-income protocol, goes to all these different parties. The intention with Minterest is that we capture all of that fee income on-chain, on the protocol, then we distribute it around the community of users in a way in which we believe is much bigger and much more inclusive. One of the things that stand out in bringing out an auto-liquidation process is that the protocol fee income it captures is far more significant than anything else out there because that fee income is normally lost from the protocol.
CT: So, what are some expected yields from passing off those revenues to users?
JR: Well, what happens is, the answer is I don’t know [laughs]. It’s very difficult for me to forecast that kind of thing. But when you think about this very type of headline, if you are looking at some of the value captures of the sector, it’s measured in the hundreds of millions of dollars. But what’s interesting is that when you look at lending protocols, generally there is no correlation between the supply of liquidity and lending activity and the token price. So, the value of the token is not correlated with protocols’ performance.
We do that when we capture all of this fee income. The protocol goes out on-market, and Minterest buys back its own tokens, and it distributes that token through to its users. Now, it’s not for me to say, and a big disclaimer is that I’m not trying to provide forecasts. But if you do headline numbers, if the protocols generate $100 million of fee income, which we should probably do when the borrowing is between $3 billion to $7 billion, that means the protocol is spending $8 million a month on its token. The protocol emits 820,000 tokens per month as part of its liquidity mod. So, if you’re spending $8 million a month and the token price is $10, then the protocol can supply all the tokens that it emits back, which is unrealistic. If the protocol is $8 million a month, then what is the token price? The answer is it’s more than $10. Now, at $40 a token, it’s buying back 50% of token emissions. At $80, it’s buying back 10%, which probably sounds more realistic.
The answer to the question is somewhere in there, or maybe more. The intention here is, and the reason that is important for the protocol generally is that it can compete with others in terms of APY. The more the token prices increase, the greater the internal APY that is actually being caused for the borrowers and lenders. That means it can attract more liquidity, outcompete and gain more longevity and relevance.
CT: Why choose Moonbeam, in particular, to launch your protocol?
JR: Well, there are a couple of key things. One, there’s the question of why Polkadot first, and why Polkadot is much more than another Solana or Algorand. There are some very powerful things about Polkadot that we really like. Initially, Minterest was built on Substrate — it was built to have its own parachain. But what it really came down to was actually time.
CT: One of the biggest barriers to entry for new DeFi users is probably high gas fees. What is Minterest doing to mitigate this?
JR: Well, that’s one of the beauties of being on Polkadot, as well as being on Moonbeam. Gas fees literally go away as a concern. When you think of one coming out of Ethereum with different degrees of success, but at the end of the day, that’s what the Polkadot architecture is designed to do. It’s designed to enable vast numbers of transactions to occur while still retaining very, very low gas prices and very, very high latency. So, that’s one of the key benefits: We see gas prices as becoming a nominal concern, a concern that will disappear on Polkadot. The gas prices just become fairly insignificant, not just for a brief period of time but permanently. And that’s a very important consideration.
CT: Has the platform been audited, financial- or programming-wise?
JR: We are actually going through three audits. We’ve got auditors coming in next month, so we’ve got three very significant work firms coming, and the audit process really goes into [inaudible]. Again, we’ve got more than 10,000 lines of code. It’s the most significant kind of codebase of any lending protocol out there. So, that process takes time. But we obviously are not going to be doing anything until we get these things off. We’ve got internal security onboard on our team, but you don’t rely solely on auditors alone from our perspective. Auditors are really there to ensure that nothing gets missed. And we consider audit-team relations to be ongoing. We really want our relationships to be with very, very incredible audit firms. So, the idea lies with security and trust.
CT: What are some steps Minterest is taking to protect users’ assets from malicious activities?
JR: That’s actually part of building the protocol. One of the key things is that when it actually catches value like Minterest does, it’s not a very big step to self-insure, but to build out the fee income it captures. But at the end of the day, what this comes down to is that building out protocols is not simple. So, while there are hundreds of DeFi projects around, it’s really a small handful of significant lending protocols, and the reason why is they are expensive to do well. If you want to do them cheaply and quickly, five guys in a garage could do. We have a team of 30 to 40 full-time staff, and that is not an insignificant exercise. The reason why we do that is because that’s what it takes to do it at a level to ensure these sort of events you are seeing across smaller protocols don’t occur. And by the way, mistakes can get made. You saw recent issues happening with one of the leading protocols; it wasn’t an exploit, it was just a small mistake, and I regard their teams as extraordinary professionals. That’s the reason why we build some form of insurance into the system, so that people don’t lose their money.
CT: What is your overall vision for Minterest?
JR: We want to build Minterest as a fairer financial system. And the reason we think it’s fairer is because when you look at lending protocols, people get liquidated very significantly, and that money goes off-protocol. What this is about is how do the people that create the value of the protocol benefit. And the people who create the value of the protocol are a large ecosystem of users, not just a small subset. So, what Minterest is built out to do is to enable people to really benefit from the value they create from participation. We think bringing a new design and framework to the protocol is going to be a new piece of innovation inside this sector. One of the things to look at is that sector leaders in the space have all brought breakthrough innovation. You look at Maker, you look at Curve, you look at Aave — each of the three protocols has brought enormous innovation into the space, innovation that I deeply respect. We like to think Minterest is also a very new innovation to the space for the benefit of the people, and that’s really what the protocol is about.
In a presentation made during the Singapore Fintech Festival, Annerie Vreugdenhil, chief innovation officer of ING, announced the firm is working on a trial of its decentralized finance, or DeFi, peer-to-peer lending protocol with the Netherlands Authority for the Financial Markets. Vreugdenhil said the following in regards to the development, as reported by Ledger Insights:
We are looking into peer-to-peer lending in a DeFi kind of setup. But then not on Bitcoins. What is interesting to us is how you can probably create peer-to-peer lending or open up lending capabilities with different kinds of collateral. So with different ways of doing this rather than with volatile Bitcoin.
ING is a Dutch financial service multinational with over $1 trillion in total managed assets. In a white paper published earlier this year, ING specifically mentioned lending protocol Aave, which is built on the Ethereum (ETH) blockchain, as one recent innovation in the industry. Through smart contracts, Aave enables borrowers to deposit crypto as collateral and take out a stablecoin loan.
The mechanism can be used as a traditional asset loan, i.e., take out debt to pay for everyday expenses while one’s investment continues to compound. In line with ING’s concerns about using volatile assets as collateral, Aave also enables the borrowing and lending of stablecoins. At the time of writing, borrowers can earn approximately 3% interest per annum by depositing their DAI into variable-rate pools while lenders pay 4% interest per annum vice versa.
While ING praises DeFi for its borderless payments, 24/7 operations, and speed of transactions, its white paper pointed out several drawbacks. In particular, since borrowing and lending protocols require collateral, they do not enable the creation of new money for initiatives such as financing companies and entrepreneurs.
Nevertheless, ING has taken a keen interest in the blockchain industry in recent years. At the end of 2020, ING joined the Blockchain Education Alliance. The firm also began working on digital asset custody in 2021, and discussed a number of stablecoin developments during a conference in April of this year.
Annual percentage yields, or APY, on crypto borrowing and lending platform Aave have surged to record levels after capital withdrawals sent the decentralized finance, or DeFi, protocol into a liquidity crunch. At the time of writing, variable APY on borrowing stablecoin Dai via Aave has surged to 24.88%, compared to approximately 6.50% the day prior.
According to cryptocurrency researcher Igor Igamberdiev, blockchain personality Justin Sun was responsible for at least billions of dollars in withdrawals in the past few hours. Aave’s total value locked, or TVL, fell to $14.7 billion from $17.89 billion the day prior, based on data from DeFi Pulse.
In a series of tweets, Aave developers revealed that financial modeling platform Gauntlet Network submitted an Aave Improvement Protocol, or AIP, to disable the borrowing function for xSUSHI and DeFi Pulse Index (DPI) tokens as a precautionary measure. In addition, the AIP also called for disabling Automated Market Maker, or AMM, liquidity provider tokens on the Aave AMM Market as an extra safeguard.
Earlier in the week, members of the Aave community voiced concerns regarding vulnerabilities with using xSUSHI tokens as collateral for borrowing on the platform. Aave developers alleged that the Gauntlet Network team ran simulations showing that it would not be economically feasible to exploit xSUSHI tokens on Aave. However, Aave developers claim that the Gauntlet Network still put forth the AIP despite these results. The AIP is currently in the voting phase, with “Yes” votes heavily favored.
Prior to today’s flight, Aave was the most popular DeFi protocol as ranked by Defi Llama. The platform has a lot of traction among cryptocurrency enthusiasts looking to yield farm or take out a stablecoin loan by pledging their digital currencies as collateral.
Lending has been around in some form for thousands of years — dating back to ancient civilizations where farmers would borrow seeds and use crops as repayment.
The arrival of fiat currencies transformed the way economies were run back then. Indeed, you could argue that we’re seeing such a seismic shift now as cryptocurrencies become a larger and more influential part of the world’s financial ecosystem.
When done right, crypto lending has the potential to level the playing field — giving consumers a type of flexibility that they may otherwise have been unaccustomed to. For several years now, the rates offered by banks have been tepid to say the least. In some countries, even the most generous savings accounts will only pay less than 1% interest — even if funds are locked up for several years.
Given how inflation has been rising sharply recently, in part because of the money printing performed in response to the coronavirus pandemic, signing up for one of these accounts means a saver’s money would actually command less spending power down the line.
Crypto lending offers three powerful advantages compared with the status quo. First, it is possible to find more competitive deals that ensure capital actually grows — with interest sometimes paid on a weekly or a monthly basis. Second, many platforms offer a much-needed degree of flexibility to lenders, meaning that they won’t be forced to lock up their money for long periods of time and can withdraw their funds at will. And third, it can act as a powerful incentive when markets are behaving rather erratically.
That’s before we’ve even discussed the fact that crypto as collateral can be far more practical from a lender’s point of view than real estate — an asset that is rather illiquid and can be rather time consuming to sell.
It isn’t just lenders who benefit
Of course, all of this sounds like a good deal for lenders — the people who have capital to spare. But it can also be beneficial for borrowers, too. In the current financial ecosystem, where a single blemish on an otherwise impeccable credit history can deny a responsible consumer access to the best interest rates, crypto platforms can offer an invaluable lifeline.
Banks often have an opaque list of requirements when it comes to finding the people they are willing to extend credit to. And, in a world where ever-increasing numbers of consumers are self-employed, otherwise creditworthy applicants can end up being excluded from the market simply because they don’t have a traditional nine-to-five job — irrespective of whether they actually earn more money in their current arrangement.
The crypto world can help to foster inclusivity here, but there are challenges. A number of lenders in this space are offshore and unregulated — something that can make them less appealing to everyday consumers. This also restricts the number of partnerships that crypto platforms can enter into with fintech firms.
A new approach?
One platform that is aiming to shake up the world of lending is Baanx, a crypto-as-a-service fintech intending to bridge the worlds of crypto and fiat. The company allows brands to offer interest-free forms of secured lending to their customers and communities, alongside high savings rates for those who stake their digital assets. This is all achieved via APIs that can be rapidly integrated into any DeFi, exchange, or wallet’s app or website.
This form of interest free and low cost secured lending is provided to those who stake BXX, the utility coin that’s associated with Baanx. Loans can subsequently be moved into crypto wallets or physical and virtual cards. For those who use Bitcoin and Ether as collateral, loan-to-value ratios of up to 50% are available, and approval can be achieved in one click.
Baanx is on the list of temporarily registered cryptoasset businesses with the FCA and also utilizes a lending license. The project’s whitepaper states that it will “lend against any digital asset including cryptos, stocks, bonds and the emerging NFT asset class.”
The volumes of money that can be offered through lending will depend on the volumes of tokens that are staked within its system.
Figures provided by Baanx suggest that the platform now has sold more than 600,000 white-label cards and accounts around the world — almost exclusively through branded corporate clients, including Tezos Crypto Life app, DeFi protocols, exchanges, and wallet providers. It is also planning to launch with a major wallet provider in the U.S. in the fourth quarter of 2021.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.
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.
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.
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).
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 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 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 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 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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[Featured Content] Arguably one of the best use cases for Bitcoin as the leading cryptocurrency is a store of value. In other words – an asset that doesn’t depreciate in value over time but rather does the opposite. This is a heavily debated topic in the past couple of years, and it became especially pressing […]