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Ethereum staking

Mar 7, 2024 | Uncategorized

Staking

Ethereum staking is the process of participating in the proof-of-stake consensus mechanism of the Ethereum blockchain. Staking became possible since the blockchain transitioned from proof-of-work to a proof-of-stake as part of Ethereum 2.0 upgrade.

In a proof-of-stake system, validators are chosen to create new blocks and validate transactions based on the number of coins they stake as collateral. Validators have a financial interest in the correct validation of transactions, as they risk losing their staked funds if they act maliciously.

Users can participate by becoming validators or by delegating their coins to existing validators. In return for their participation, validators and delegators may receive rewards in the form of additional cryptocurrency.

Liquid staking

Liquid staking makes the process of staking more flexible. Instead of locking their funds, users obtain staking tokens indicating their staked position. Because these coins are not locked up for a predetermined amount of time, they can be exchanged on different platforms. They can also be utilized in other decentralized finance (DeFi) protocols.
By using liquid staking, users can maintain their liquidity without having to wait for a set amount of time for the unstaking period to end. However this may include more levels of complexity and hazards, despite its flexibility.

Liquid staked tokens are most of the time reward bearing token. So native rewards that are generated from staking are captured by the protocol and reflected in the price of the token. However, liquid staking offers generally less rewards compared to native staking.

Restaking

Restaking is a new concept that lets users restake their staked ETH to secure new protocols. In other words, Ethereum’s secure network can be reused or rented to power new projects. Because of the extra utility of the tokens, the advantage for restakers is additionnal yields.

Risks

There’s a lot of risks in staking, so you will have to do a deep research. Here’s a short list:

  • Slashing Risk: Validators may be subject to penalties, including the potential loss of staked funds, if they behave maliciously or fail to follow network rule.
  • Network Security: Malicious actors could attempt to compromise the network’s security
  • Market Volatility: The value of the staked cryptocurrency may fluctuate with market conditions
  • Bugs or vulnerabilities in the protocol

For liquid staking:

  • Smart Contract Risks: The code for interacting with liquid staking could contain vulnerabilities that could be exploited by attackers.
  • Liquidity Risks: Liquidity in the secondary market for liquid staking tokens may be lower than for the native staked tokens, leading to potential challenges in buying or selling these tokens.
  • Custodial Risks if applicable
  • Protocol Upgrades

How to stake your ETH

Staking your ETH on Ethereum’s main network can be expensive depending of gas fees. We will look at different ways to stake your Ethereum and cheaper alternatives.

Ether.fi

Ether.fi is a leading liquid staking platform. What makes ether.fi stand out is that they will natively restake your liquid staked tokens on EigenLayer in the background, which will provide you with additional rewards.

The staking process is simple, you can even provide stETH or cbETH (staked tokens with other platforms):

For now, ether.fi is only available on the Ethereum mainnet, so staking a small amount could not be profitable considering the gas fees.

As of today, staking with ether.fi gives you points for ether.fi and Eigenlayer. These loyalty points could be eligible for a future airdrop by both platforms.

Renzo Protocol

Renzo protocol is similar to ether.fi. It uses Figment as a validator and it will enable restaking for additional yields.

However, Renzo now supports Arbitrum and Binance chain. Staking your ETH on these chains is much more affordable.

Renzo also offers Eigenlayer loyalty points as well as its own Renzo ezPoints for possible future airdrops.

Kelp DAO

KelpDAO is a similar platform that offers Eigenlayer points and its own loyalty points as well. For now it’s only available on Ethereum mainnet.

Pendle Finance

Pendle.finance offers a diverse way to get exposure for ethereum restaking and for the different loyalty points exposure. It also offers these programs on the Ethereum mainnet as well as Arbitrum:

Here are the programs for Arbitrum network:

Pendle.finance offers a multiplier for the points and for each program it offers 3 ways of getting involved:

  • Purchase YT: Basically you are purchasing the points and giving up your deposit. The downside is that when you “purchase” the points you don’t know exactly how much they are worth.
  • Provide liquidity to the pool: This will help you to retains most points and earn additional revenue from the pool swapping fees. However, you have additional risk of impermanent loss.
  • Purchase PT: By purchasing PT, you give up on the points you are eligible to for a fixed yield. The downside is that the points might make you eligible for an an airdrop that is worth more than the yield.

As we can see, pendle offers many options, each with its own risk/reward level.

Rabby wallet

Rabby wallet

Mar 2, 2024 | Uncategorized, Wallet

In our last article, we talked about Rainbow wallet, which is a good alternative to metamask. In this article, we will talk about Rabby wallet, another solid alternative to metamask.

Rabby wallet is an open source crypto wallet built by DeBank. DeBank is a Web3 messenger that lets you send and receive messages to a Web3 address. Debank offers a powerful dashboard that gives you a summary of your assets and investments. You will be able to find all the liquidity pools that you contributed to on many chains. That is very helpful in case we lost track to which pools and protocols we have already deposited to. DeBank also flags the scam transactions in your transaction history. We can’t prevent our wallet from receiving scam transactions for now, so it’s very important to understand them and not to fall to the promising scam NFT we keep receiving:

Rabby wallet offers a seamless multi-chain experience for DeFi users. It uses a pre-transaction potential risk scanning to prevent you of any risk and before you sign a transaction, the balance change will be displayed.

Rabby offers a points system that rewards users for different actions like swapping through the wallet. You can use this code RBYPOINTS to boost your points.

Once you install the wallet, you can connect your hardware wallet, create a new wallet or import an existing one. After the initial setup, you can claim your rabby badge from debank by clicking on the More icon:

And claim your badge:

There are a few steps to complete, essentially making a swap transaction:

Once completed, you can claim DeBank testnet tokens:

How to verify your L2 airdrop score

Feb 21, 2024 | Uncategorized

Rhino.fi offers an interesting tool that helps you determine your potential eligibility for an airdrop from the new layer2 networks.

On the site, you can click on “Trackers”, select the network and input your address.

Based on your transaction history on that chain, Rhino will give you a score and you have the possibility to run a simulation. While a good score does not guarantee and airdrop, it will let you know what interactions with the platform you can do to better your chances.

Besides this functionality, Rhino offers a bridge with reasonable fees. In the following example, it would cost 1.7 USDC to bridge from Scroll to ZkSync Era:

You can also check our article about owlto for other bridging possibilities.

Other interesting platform for checking your level:

rubyscore displays the level you reached for each network and lets you claim level NFTs that will help you generate more transactions and level up.

netlify gives you a comprehensive summary of your status based on previous airdrops.

Rainbow wallet

Feb 21, 2024 | Uncategorized

Are you looking for an offline wallet for your Web3 journey? Besides the famous metamask, there are a lot of new wallets that are getting traction and support.

Rainbow is an open source self-custodial wallet for the Ethereum stack. You can download it as an application or as a browser plugin. You can even pair it with your hardware wallet.

What’s special about Rainbow is that it has a points system that rewards users that already use the Ethereum stack for swapping and other transactions, even if you don’t use the Rainbow wallet yet! You can check it out and see if you have any points ready to claim!

Cost of bridging on Ethereum L2

Feb 17, 2024 | Layer 2, Uncategorized

In this article we will go over the fees for bridging your assets from one L2 chain to another. We will use the owlto bridge, which is offering a discount for now.

We will transfer some USDC from Mantle to Scroll networks. Using owlto is straightforward, you select the asset you want to transfer and choose the source and destination chain:

On the next step you can verify the details:

We can see that the bridge fee if free for now, but there’s a destination cost of 1.5 USDC.

Once we Confirm and send, we have to pay the gas fees on the Mantle network in MNT:

Don’t rely on the values shown in metamask for now because the final gas fee will be much higher. Probably there’s a UI error or the real price of MNT in metamask is not accurate. Also, metamask shows the gas price on L2, but does not show the actual transaction fee.

Once the transaction is complete, owlto provides us with the transaction links on the mantle scanner and scroll scanner. We can check the details over there to get the exact fees:

On Mantle:

On Scroll:

So in total here’s how much it costs:

0.1287 MNT

1.5 USDC

0.0001437 ETH

At today’s price it’s around 1.99 $ in total fees. It’s acceptable for the amount transferred, but if we want to transfer a smaller amount, the fee is roughly the same, so you will have to see if it’s worth it. In the future, the platform will start charging a bridging fee so that’s something to consider too. Also we have to take notice that these fees will vary depending on each network’s congestion.