Staking basics

Introduction to ETHx

Shivendra Singh

Apr 14, 2023 • 4 min read

Liquid Staking Tokens (LST) are said to be the driving forces for Ethereum decentralization.

Yet, paradoxically, it can appear to be quite centralized. Here’s why that can be a cause of concerns. Two of the most preferred ways of staking $ETH are—

▻ Liquid staking (36.4%)

▻ Centralized exchanges (24.5%)

Even though Liquid Staking being the most preferred way to stake, there is still a large portion that is staked via Centralized Exchanges (CEXs). Now the problem with staking $ETH using CEXs is that it can be the cause of Centralization in the network.

That's where liquid staking comes in, with Liquid Staking Tokens we can combat this and be the driving force for a more decentralized and capital-efficient network.

Also Read: What is Ethereum Merge

However, another thing to be noted is that the current LST market is heavily centralized too. With just one Liquid Staking player holding over 74% of all liquid staked assets on Ethereum. Also the top 3 largest Liquid Staking protocols have control to the 94.5% of all LST on Ethereum.

With this kind of centralization, the network can be at multiple risks such as:

▻ Massive slashing events

▻ Censorship of transactions

What is ETHx?

Stader’s intent with its liquid staking token, ETHx, is to create an LST with a unique value proposition to users and node operators while also adding to the diversity of LSTs on ETH.

Some of the key features of ETHx are as follow:

Built for Rewards: You can leverage our multi-chain partnership expertise through which can maximize your rewards.
Distributed & Scalable: You can stake across home stakers & high performance professional operators making it highly scalable.ETHx’s multipool architecture will help to scale up smoothly with user demand.
Secure: We have been undergoing smart contract audits by top security firms including Sigma Prime and ConsenSys making it a secure platform for the users.

Also Read: Ethereum Staking Rewards

How does ETHx help at solving Liquid Staking issue?

We, at Stader, want $ETH to thrive. We’ve taken a few steps to make the Ethereum network get more decentralized while satisfying the user’s demand.

That’s why we:

▻ Support stakers of all shapes & sizes

▻ Encourage permissionless node operations

▻ Fight for a decentralized staking ecosystem

How is Stader planning to do that?

ETHx multi-pool architecture is for all kinds of NOs including:

Permissionless node operators: Permissionless node operators are the backbone of $ETHx.They’ll operate permissionless and without any whitelisting. Also, we've reduced ‌ bonding requirements to 4 ETH to incentivize more home stakers to join.
Permissioned stake pool: ETHx will have a set of curated, community-approved list of permissioned operators, reputed entities of consistently high performance. They’ll complement the permissionless node capacity and will help the ETHx to be seamlessly scalable.
DVT stake pool: DVT will distribute the validator duties among multiple nodes by leveraging threshold cryptography. Its high fault tolerance will reduce slashing odds. We're already live on testnet with SSV Network.

Also Read: Smart Contracts

Why Stader’s $ETHx ?

Now to sum up on how Stader’s, $ETHx will help Ethereum and the users the following way :

We will drive decentralization with permissionless node operators

We will scale the demand with permissioned operators

Stader’s ETHx will provide users a robust alternative that will have best-in- class staking rewards (access to MEV+tips, competitive commission), and strong DeFi.

ETHx’s multipool architecture will help it scale up smoothly with user demand.

And in this way, we at Stader will help $ETH get more decentralized while satisfying the user’s demand. We are soon going to live on our platform. Keep an eye out for all ETHx related updates on Stader.

Also Read: What is Decentralisation in ETHx

FREQUENTLY ASKED QUESTIONS (FAQ’s)

Q) What are the benefits of liquid staking Ethereum?

Ans) There are a number of benefits of liquid staking Ethereum, including:

Flexibility: Users can unstake their ETH token at any time, without the need to wait for a lock-up period to expire.
Accessibility: Liquid staking makes it accessible for anyone to participate in staking as the minimum ETH required is accessible to everyone.
Liquidity: Ethereum’s LSTs are ERC-20 tokens, which means they can be traded on exchanges and used in a variety of DeFi protocols.

Q) What are the benefits of Liquid Staking ETH?

Ans) Some of the most lucrative benefits of liquid staking your ETH are:

You can earn staking rewards on your ETH without locking it up for a specific time to earn more staking rewards.
You can use your liquid tokens to trade or lend in DeFi.
Liquid staking is a more accessible way to participate in ETH staking as the minimum amount to stake is minimal as compared to other options.

Q) Can I unstake my ETH before the end of the staking period?

Ans) In most cases, you can unstake your ETH before the end of the staking period. However, you may be penalized for doing so. It's important to check the terms and conditions of your staking service to understand the penalties for early unstaking. This is crucial information before proceeding to know how to stake ETH.