Liquid staking for ETH 2.0 without lockups or rewards slashing

The long-awaited Ethereum 2.0 upgrade is set to launch on December 1st, marking a major step for the Ethereum blockchain, shifting the consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). 

Ethereum 2.0’s beacon chain genesis is set to launch at the earliest possible launch date of December 1st. Everyone can still participate in this “historic moment” in blockchain. It is not too late to stake your ETH, but you have to choose between different options. While staking on Ethereum will lock up your ETH, you can easily stake on StakeHound, not giving up the control over your funds.

Staking with Ethereum 2.0

The Ethereum network is the blockchain’s biggest network to transition to Proof-of-Stake (PoS) from Proof-of-Work (PoW). This was confirmed following the transfer of 524,288 Ether (ETH) from 16,384 validators into the Eth 2.0 deposit contract, which went live on November 4. Transfers to the deposit contract increased rapidly from 23rd to 24th November 2020, with over 200,000 ETH sent in just 24 hours. This long-awaited transition to ETH 2.0 promises upgrades that will improve the security, scalability, and sustainability of the Ethereum blockchain. While its improvements are promising, most users are left to face a pivotal decision of whether they should stake with ETH 2.0 or not. 

ETH staking requirement and reward slashing

Staking with ETH 2.0 promises users steady staking rewards, including high yield savings. But while the staking returns seem generous, the staking requirements might be too high and restricting for many users. To stake with ETH 2.0, users are required to stake a minimum of 32 ETH, which is currently worth about US $16,000+. Apart from the high entry point, users are expected to lock-up their stake for a minimum of 18 months.

Not only are these staked ETH rendered illiquid, but also users must host their own nodes and infrastructure acting as validators, with a risk of reward slashing. Slashing means that a significant part of the validator’s stake can be removed: up to the entire stake of 32 ETH in the worst-case scenario. Slashing can happen if users are unable to perform their duties as validators properly. On top of all of this, users will not receive any compound interest on their staked returns. 

With all of these limitations, potential stakers on ETH 2.0 are faced with serious questions: would it be best to run your own node and complete all the complicated and tedious tasks of a validator, or should you stake your ETH with a third party staking provider platform that can provide you with more freedom with your stake?

Staking with StakeHound

For users interested in staking with ETH 2.0 but are skeptical about its restrictive nature, staking with an alternative staking platform is the best option. StakeHound is a liquid staking platform that allows users to enjoy all the benefits of staking while removing the restrictions that come with it. 

When staking on ETH 2.0, users must maintain a node, bear an 18-month lock-up period, and provide a minimum of 32 ETH. StakeHound removes these limitations by enabling users to stake without lock-ups and a minimum entry staking requirement. This means that anyone can stake their ETH without needing significant capital. Best of all, users are not required to run their own nodes. 

Apart from these benefits, users who stake on StakeHound will receive stETH, which is a 1:1 wrapped version of the staked ETH, allowing them to freely participate in decentralized finance (DeFi) products and services as lending, borrowing, or yield farming. With this solution, users can now enjoy the high yields of staking, as well as many benefits DeFi has to offer. Overall, StakeHound provides freedom from all the restrictions users are faced when staking with ETH 2.0 while providing additional benefits such as immediate liquidity.

 

Criteria

StakeHound

Ethereum 2.0

No Lock-up period

18 months

No Minimum deposit

32 ETH (US $16,000)

No Reward Slashing

X

No nodes & infrastructure

X

 

Conclusion

Staking with ETH 2.0 has many benefits and promises to provide high yields for users who will participate. However, users have shown skepticism about staking on the ETH2.0 platform because of its restrictive nature and limitations. Alternative liquid staking platforms such as StakeHound allow users to experience all the staking benefits without drawbacks. 

 

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Wrap, earn & stay safe – let your assets securely work for you

Wrapped assets are becoming increasingly popular in the Blockchain ecosystem because they are able to generate many new yield opportunities and use cases for crypto holders. But there are different ways of wrapping assets, some of them assuring more legal and technical security than others. StakeHound is a new service that provides users the best of both worlds: a secure way of wrapping and liquid staking on coins such as Ethereum.

Wrapping is a new original

Simply put, a wrapped token is an asset usually hosted on another Blockchain with a value identical to its underlying asset. Most commonly, these assets can be found on the Ethereum blockchain as an ERC-20 token.

As users are shifting away from centralized exchanges (CEX) to decentralized exchanges (DEX) built on Ethereum, ERC-20 tokens are key to enable listings and trading on a DEX. The way to bridge the gap for non-ERC-20 tokens is through wrapped tokens. 

From a user perspective, this opens not only the door to decentralized exchanges such as Uniswap but also enables many use cases around decentralized finance (DeFi) such as lending, borrowing, or providing liquidity for all kinds of trading pairs. By wrapping their tokens, users can now gain exposure to various services available on the Ethereum blockchain. 

Centralized vs. Decentralized wrapping

An important question to ask here is whether these wrapped tokens are safe. But what are actually the options here? 

There are two main ways of wrapping tokens: wrapping through a centralized institution or through a decentralized method. WBTC or Wrapped Bitcoin is an example of a centralized approach. By wrapping the original Bitcoin through a centralized institution such as Bitgo, users put their tokens with a licensed custodian.

On the other hand, a decentralized method uses smart contracts to verify that the original assets of their wrapped versions exist. Ren Protocol is an example of that. The critical difference between the two is that having a centralized institution as a custodian provides more security and legal protection to users.

Safety First

As we see more and more institutional and retail money flowing into DeFi and specifically into these wrapped assets, we at StakeHound believe that user protection and legal compliance on a global scale is key to building the next generation of financial products.

With StakeHound, users can create wrapped assets that are instantly transferable and can be immediately used in DeFi products and services. Users can soon purchase wrapped assets with their favorite tokens such as ETH, Dash, XZC (Firo), RADIX, or XEM and XYM. The user assets are then put into custody by our institutional-grade custodian partner. StakeHound itself is a Swiss-registered company. 

Wrap and earn yields on your original assets

Once the tokens have been received, StakeHound instantly generates and sends the user a one-to-one ERC-20 representation of their original tokens. The amazing thing for users is the yield options that this allows. 

How is this possible? As StakeHound focuses on wrapping crypto assets with staking options, we can generate yield on the original assets. So, StakeHound stakes the tokens it receives, stakes, and distributes the staking rewards directly to users. This way, the user does not have to do anything. Once every day, the user will simply see an increased token balance in their wallet. 

For the user, this enables a whole new way of earning staking rewards, most notably, because they earn those rewards without locking up their tokens. The staked version generates passive income and can be used at any time, either to trade or to participate in all popular DeFi applications.

For users who are worried about not participating in decentralized finance because of not owning ERC-20 tokens, this innovative technology of wrapping tokens is the answer. With StakeHound, users can now enjoy the benefits of staking without the need to experience the limitations that come with it. But that’s not all. And on top of that, users will also receive HOUND, our native governance token.

Ethereum 2.0 – the perfect use case

With the launch of Ethereum 2.0 in the near future, many users are facing exactly the problem we just described: They can potentially earn yield by staking their ETH, but they have to accept a long lockup period. As their ETH is locked up, it is essentially an illiquid asset in their portfolio. So, for the user, it comes down to choose between yields or liquidity. 

Stakehound solves that problem by giving the user the wrapped version of Ethereum named stETH. This way, the user is receiving a wrapped version of ETH – stETH that is not only liquid; but also secure as it is held by a trustable and regulated custody provider.

 

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stETH: Staking ETH 2.0 with StakeHound without lockup and full usability

StakeHound is thrilled to bring to the market stETH – a liquid wrapped version of ETH 2.0 released on December 1st, 2020 giving immediate liquidity and unlocking the staking rewards for the users.

The highly anticipated ETH (Ethereum) 2.0 release is a set of upgrades that improve the scalability, security, and sustainability of the Ethereum blockchain and is set to go live this December. While it promises of holding out steady staking returns, this network upgrade also creates illiquidity through lockups and the risk of running infrastructure and hosting a validator node. This has made users face a crucial decision: should users stake with ETH 2.0 or not?

ETH 2.0 Staking deal

The Ethereum network has a market cap of US$40.6 billion and is the biggest network to transition from proof-of-work (PoW) to proof-of-stake (PoS). If users choose to join this transition to Ethereum 2.0 Beacon chain launch, would it be best to run your own nodes and complete complicated, tedious work to become a 24/7 service provider?

But before answering this question, the choice that needs to be made is whether or not to stake on Ethereum 2.0. While staking on ETH 2.0 offers rewards, including high yields of up to 10% APR, users are required to stake a minimum of 32 ETH, which is currently equivalent to about US$16,000. Not only that but staked ETH must also be locked for about 18 months, making it illiquid for a long period of time. This makes users’ staked ETH unable to be used for anything else, especially the booming DeFi scene.

On top of this lock-in period and high minimum staking requirements, users will not receive compounding interest on their staked returns. Users’ earnings can also be slashed if they are unable to perform their duties as validators properly, which requires the right hardware for hosting validator nodes. While it seems like staking on ETH 2.0 has many limitations, staking ETH using a third-party provider might be the best option for new or non-technical users, new to the blockchain and staking space.

Liquid Staking of stETH by StakeHound 

StakeHound is an alternative liquid staking platform that allows potential users to enjoy the benefits of staking without experiencing limitations faced when staking on ETH 2.0. Unlike staking on ETH 2.0 and having to maintain your own nodes, StakeHound enables users to stake without lock-ups. There is also no minimum staking requirement, which means anyone can now stake ETH.

Liquid staking is a new innovative approach brought by StakeHound to Etherium users in the easiest and accessible way. stETH can be acquired on the StakeHound Platform by sending ETH 2.0 at the constant 1-on-1 rate. Staked ETH can be then immediately used in the DeFi applications while the staking rewards will be automatically distributed to all the stETH holders and can be fully accessible right away. In other words, StakeHound solves all the limitations with staking on ETH 2.0, whilst offering several benefits such as immediate liquidity and unrestricted access to the staking rewards.

 

In the following table we would like to summarize the benefits of using stETH instead of staking ETH 2.0:

 

Criteria Stake ETH 2.0 Use stETH 

Minimum lock-up period

18 months none

Minimum amount required to stake

32 ETH (US $16,000)

none

Access to the staking rewards

Rewards are locked for 18 months

Rewards are fully accessible

Access to DeFi

No, due to lock up of funds

Yes, fully liquid assets

 

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