How The New Dynamic DCA Strategy Improves your Returns


<h2 class="wp-block-heading">Announcing the Staking Calculator (Beta), Free Tool for Calculating Accurate Staking Rewards</h2>



<p><a href="https://beta.stakingrewards.com/calculator" target="_blank" rel="noreferrer noopener">Try the Staking Calculator (Beta) now!</a></p>



<p>Investors are losing out on  ~$15.9 billion in rewards in 2023 alone simply because they don&#8217;t factor in staking returns when deciding which crypto assets to buy. Over 60% of investors make this mistake, leading to faulty portfolio planning and missed investment opportunities.</p>



<p>I would have 805 ATOM ($12k) MORE today if I started staking in 2020 with only $4.5k at the time. So I missed out thinking I was too late, by not factoring in the long-term effect of staking into my analysis.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1013" src="https://cms.stakingrewards.com/wp-content/uploads/2023/04/Return-on-Atom-graphic-light-1800x1013.png" alt="" class="wp-image-11539" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/04/Return-on-Atom-graphic-light-1800x1013.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/Return-on-Atom-graphic-light-360x203.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/Return-on-Atom-graphic-light-80x45.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/Return-on-Atom-graphic-light-768x432.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/Return-on-Atom-graphic-light-1536x864.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/Return-on-Atom-graphic-light.png 1920w" sizes="(max-width: 1800px) 100vw, 1800px" /><figcaption class="wp-element-caption">The Impact of Early ATOM Staking on Returns</figcaption></figure>



<p>I also didn’t know which provider to choose for staking my crypto. Like most others, I just spent around 30 minutes selecting a provider each time, but still felt uncertain about the potential rewards. There wasn&#8217;t much information available on how to choose the right provider and from our research, stakers miss out on up to 20% higher returns and a significantly more impactful contribution to network security if they choose the wrong provider.&nbsp;</p>



<p>This is also alarming &#8211; only 38% of all stakeable crypto tokens are actually being staked. Plainly, investors are leaving low-risk money on the table.&nbsp;</p>



<p>Let me share with you the mistakes I made so that you can avoid repeating them.&nbsp;</p>



<p>Back in 2014, I was mining Bitcoin in a small Bangkok condominium and feeling frustrated with the high capital requirements needed for success. It just didn&#8217;t feel like the true crypto spirit that I had originally signed up for. This was around the time of the ICO craze, with many new shiny tokens emerging. One of these was Cosmos, which was expected to be released soon.</p>



<p>So I did a lot of research, owned a lot of shitcoins, and then discovered how simple it was to stake tokens with low requirements.&nbsp;</p>



<p>At first, I thought it was too late to start staking, but then I decided to give it a shot anyway.</p>



<p>I began using Excel spreadsheets to calculate my staking rewards, and it was an incredibly tedious process. However, this was the beginning of our journey to develop the first version of Staking Rewards. At that time, I recognized the lack of available data on staking and realized that others were definitely experiencing the same challenges. So, I collaborated with my brother Jannik to build <a href="http://stakingrewards.com" target="_blank" rel="noreferrer noopener">StakingRewards.com</a>, which we launched in early 2018.</p>



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="1600" height="769" src="https://cms.stakingrewards.com/wp-content/uploads/2023/04/spreadsheets.png" alt="" class="wp-image-11448" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/04/spreadsheets.png 1600w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/spreadsheets-360x173.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/spreadsheets-80x38.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/spreadsheets-768x369.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/spreadsheets-1536x738.png 1536w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">No More Best Guesses or Complex Spreadsheets. Try This <a href="https://beta.stakingrewards.com/calculator" target="_blank" rel="noreferrer noopener">Free Tool</a> for Calculating Accurate Staking Rewards!</figcaption></figure>



<p>Fast forward to today, and we are proud to be the leader in staking data and information.</p>



<p>Believe me when I say that you don&#8217;t want to miss out on great investment opportunities simply because you didn&#8217;t consider the power of staking. I learned this lesson the hard way when I missed out on ATOM due to underestimating the potential returns from staking.</p>



<p>So, where do you begin? Imagine being able to seamlessly integrate staking returns into your investment decision-making and portfolio planning. Or easily optimize your staking setup to earn higher rewards while also contributing to network security… without the spreadsheets.&nbsp;</p>



<p>With the right information and tools, this is all possible.</p>



<p>In just 5 minutes, you can gain insights into optimizing your staking strategy and drastically increasing long-term returns.</p>



<p>The global staking market cap has already surpassed $400 billion and continues to rise, with over 7 million staking wallets currently in use. We are on the brink of broad retail and institutional adoption, as Proof of Stake dominance grows to make up all relevant L1 blockchains (except for Bitcoin). Meanwhile, DeFi is also becoming an increasingly dominant force.</p>



<p>Investors are projected to earn over $8.2 billion in staking rewards in 2023 alone,&nbsp;with various blockchains offering an average weighted yield of 7.31% per year. This is not bad at all compared to the average dividend yield of the S&amp;P 500 Index, which has been around 1.05% in the last year.</p>



<p>This means that we’re in the golden age of crypto and <strong>we have never been more early.&nbsp;</strong></p>



<p>As more investors, including risk-averse institutional investors, enter the DeFi space, the incentive for high staking rewards will decrease. Therefore, we can expect staking yields to become more comparable to those seen in traditional markets such as the stock market.</p>



<p>Take a look at this table showing the most popular staked cryptocurrencies in 2023.</p>



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="759" height="532" src="https://cms.stakingrewards.com/wp-content/uploads/2023/04/Screenshot-2023-04-04-at-09.44.37.png" alt="" class="wp-image-11458" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/04/Screenshot-2023-04-04-at-09.44.37.png 759w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/Screenshot-2023-04-04-at-09.44.37-360x252.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/04/Screenshot-2023-04-04-at-09.44.37-80x56.png 80w" sizes="(max-width: 759px) 100vw, 759px" /><figcaption class="wp-element-caption">Top 10 PoS Assets by Staking Market Cap, Data Captured on <a href="http://StakingRewards.com" target="_blank" rel="noreferrer noopener">StakingRewards.com</a></figcaption></figure>



<p>How can you calculate staking rewards and estimate future earnings, and how do you choose the best staking provider for your crypto assets?</p>



<p>Meet the <a href="https://beta.stakingrewards.com/calculator" target="_blank" rel="noreferrer noopener">Staking Calculator (Beta)</a>. No more best guesses or complex spreadsheets. Here’s a FREE TOOL that can help you optimize your staking strategy and portfolio.&nbsp;</p>



<p>There are many questions that you’ve probably already considered. Should you stake or not? Which provider should you choose? How can you project rewards in the face of changing prices and rates? And should you compound or sell your rewards?</p>



<p>Our Staking Calculator can help you answer all of these questions by measuring the long-term effects of staking for over <a href="https://www.stakingrewards.com/cryptoassets/" target="_blank" rel="noreferrer noopener">150 assets</a> and their hundreds of providers. Including all of the most popular staked crypto shown in the above table.&nbsp;</p>



<p>Here are some of the key features available:</p>



<ul>
<li>Select and compare any asset</li>



<li>Choose and compare any provider</li>



<li>Estimate profitability of running your own validator by selecting solo staking</li>



<li>View earnings in either dollar or token amounts</li>



<li>Analyze strategies with interactive charts</li>



<li>Evaluate long-term impact by selecting up to 10 years</li>



<li>Create custom price scenarios based on your expectations</li>



<li>Explore network assumptions to see potential rewards if metrics were to change, such as if more or less were being staked.</li>
</ul>



<p>It also pulls raw data from each blockchain every two hours, helping you to estimate staking returns accurately and visually showing the impact of compounding versus non-compounding, returns based on different staking ratios, and estimated rewards for potential price changes.</p>



<p>If you&#8217;re holding onto idle crypto assets and considering staking them, it can be challenging to accurately predict your potential earnings and decide if staking is worth it.</p>



<p>Let&#8217;s say you have 50 ETH and are interested in staking. Using our <a href="https://beta.stakingrewards.com/calculator" target="_blank" rel="noreferrer noopener">Staking Calculator</a>, you can experiment with different scenarios and price changes over the selected staking period to see how much you could potentially earn compared to not staking.&nbsp;</p>



<p>Or maybe you’ve just bought $20,000 worth of ATOM to stake for the next 2 years. If you’re using a spreadsheet, you’re definitely going to struggle to project your earnings for staking in light of anticipated price fluctuations. On the calculator, all you have to do is select Cosmos and play around with the fields to, once again, see how much you could potentially earn compared to not staking.&nbsp;</p>



<p>It offers unlimited possibilities.&nbsp;</p>



<p>Thousands of people are missing out on this opportunity because they don&#8217;t fully understand staking or how to optimize their staking setup.&nbsp;</p>



<p>That&#8217;s why I highly recommend using the Staking Calculator to better plan your investments and ensure you&#8217;re earning the highest possible staking rewards.&nbsp;</p>



<p>This is an invaluable tool for any investor looking to incorporate staking into their portfolio.</p>



<p>&#8212;</p>



<p>🔗 Watch this 17-minute video on the Introduction, Features and Use Cases for the Staking Calculator (Beta): <a href="https://www.youtube.com/watch?v=kOtWyQgSTd0" target="_blank" rel="noreferrer noopener">https://www.youtube.com/watch?v=kOtWyQgSTd0</a></p>



<p>🔗 <a href="https://beta.stakingrewards.com/calculator" target="_blank" rel="noreferrer noopener">Try the Staking Calculator (Beta) now!</a></p>



<p>🔗 Feedback, bugs, features and questions: <a href="https://www.youtube.com/redirect?event=video_description&amp;redir_token=QUFFLUhqbnpud0ROeENYb1kzRnVRZTlPd245RDlrNHdKQXxBQ3Jtc0tudlVfWXhPZEtnTlBEOU1GTE9WMXdPWXNqY3RJRVhSaDVDSFN4dHZyS3dDVWpabnN0ZWxuOG1vTXluZU1QaU5pRmVuTW1taTR1MlJ2dUZycjBqUGJwWDJ0WDVJWllvc2kxbXZhVkIyWExwX19yVENWTQ&amp;q=https%3A%2F%2Fdiscord.gg%2Ft2wVJv3e&amp;v=kOtWyQgSTd0" target="_blank" rel="noreferrer noopener">https://discord.gg/t2wVJv3e</a></p>


Staking Calculator (Beta) Helps Investors Avoid Missing Out on Billions in Potential Crypto Gains Through Staking


<p>A recent panel discussion at the <a href="https://youtu.be/P9TY0MdpN2U?t=7684">Staking Rewards ETH Staking Forum</a> brought together experts from the staking industry to share their insights on the challenges and opportunities to improve staking compliance not only in the regulatory sense but also in institutional compliance requirements. The panel featured Alison Mangiero from POSA, as the moderator. She was joined by Brian Mosoff from Ether Capital, Kuhan Tharmananthar from Consensys Codefi, and Ernest Oppetitfrom from Kiln. Let’s dig into the key takeaways.</p>



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Institutional ETH Staking Post-Shanghai: Online Forum by Staking Rewards" width="500" height="281" src="https://www.youtube.com/embed/P9TY0MdpN2U?start=7684&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>
</div></figure>



<p><em><strong>If you like conversations like these, check out our biggest Staking Summit yet. On November 10th, 2023, we’re hosting a 2-day summit in Istanbul. Don’t miss out; early-bird tickets are going fast. Learn more&nbsp;<a href="https://bit.ly/3JqDRH1">here</a>.</strong></em></p>



<h2 class="wp-block-heading">1. Importance of Transparency in Staking Operations</h2>



<p>Brian Mosoff emphasized the need for transparency in staking operations. He mentioned that institutions and regulators require detailed information on staking providers&#8217; activities, such as relay usage, OFAC compliance, and monitoring missed attestations and blocks. This information helps institutions assess the risks and make informed decisions on staking investments. It also aids regulators in understanding the industry and creating appropriate guidelines.</p>



<h2 class="wp-block-heading">2. Navigating Regulatory Compliance</h2>



<p>Ernest Oppetit discussed the importance of understanding and navigating the different regulatory compliance requirements across jurisdictions. He highlighted that compliance should be proactive, with staking providers working closely with regulators to address concerns and create compliant products. This collaboration helps build trust and fosters a healthy relationship between the staking industry and regulators.</p>



<h2 class="wp-block-heading">3. The Role of Service Providers in Compliance</h2>



<p>Brian Mosoff and Kuhan Tharmanathar discussed service providers&#8217; role in helping institutions comply with staking regulations. Staking providers can act as consultants and advisors, sharing their expertise and knowledge with traditional institutions to help them understand the intricacies of staking compliance. This partnership is crucial in bridging the gap between the two industries and fostering greater collaboration and understanding.</p>



<h2 class="wp-block-heading">4. Cybersecurity Measures in Staking</h2>



<p>Ernest Oppetit and Kuhan Tharmanathar shared their thoughts on cybersecurity measures in staking. They agreed that security should be a top priority for staking providers, with constant attention to potential vulnerabilities and risks. Regular audits, penetration tests, and maintaining a culture of prioritizing security are essential for ensuring the safety of staking operations.</p>



<h2 class="wp-block-heading">5. Non-Custodial Staking Solutions</h2>



<p>Kuhan Tharmanathar emphasized the benefits of non-custodial staking solutions, which give customers greater control over their operations. By offering flexibility regarding validator regions, cloud providers, and MEV relays, non-custodial solutions empower institutions to make decisions that best suit their compliance requirements and risk profiles.</p>



<h2 class="wp-block-heading">6. Challenges in Achieving Regulatory Clarity</h2>



<p>The panelists discussed the challenges in achieving regulatory clarity for staking. Alison Mangiero pointed out that it&#8217;s about clear guidelines and creating an environment that fosters innovation and growth. Brian Mosoff added that while regulatory clarity is essential, the industry must also work on best practices and develop solutions that proactively address regulators&#8217; concerns.</p>



<h2 class="wp-block-heading">7. Institutional Adoption and Compliance</h2>



<p>The panelists agreed that institutional adoption of staking is not solely dependent on compliance. However, clearer guidelines and compliance solutions can help drive adoption by reducing uncertainties and risks associated with staking investments. As more institutions enter the space, a collaboration between the staking industry and regulators will become increasingly important to ensure compliance and innovation.</p>



<h2 class="wp-block-heading">8. Ongoing Evolution of the Staking Industry</h2>



<p>The panelists highlighted the ongoing evolution of the staking industry, with innovations and opportunities continuously emerging. They emphasized the importance of staying abreast of these developments and adapting to changes in the staking landscape. This ongoing evolution means that institutions will always need guidance and expertise from staking providers to navigate the complexities of staking compliance.</p>



<h2 class="wp-block-heading">Final Thoughts</h2>



<p>The panel discussion provided valuable insights into staking compliance challenges and opportunities. Transparency, proactive engagement with regulators, and robust cybersecurity measures are essential for creating an environment where institutions can confidently participate in staking. As the industry continues evolving, a collaboration between staking providers and traditional institutions will be crucial in bridging the knowledge gap and fostering greater uptake of staking services. For future conversations like this, check out our&nbsp;<a href="http://bit.ly/3JqDRH1">Staking Summit 2023</a>.</p>


Making Staking Compliant: An Examination of Essential Tooling and Standards


<p>A recent panel discussion at the <a href="https://youtu.be/P9TY0MdpN2U?t=9614">Staking Rewards ETH Staking Forum</a> brought together experts from the staking industry to share their insights on how the industry can build toward a decentralized future. The panel featured Felix Lutsch from Chorus One as moderator, Oisín Kyne from Obol Network, Alon Muroch from SSV Network, and Sreeram Kannan from Eigenlayer. Let&#8217;s dig into the key takeaways!</p>



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Institutional ETH Staking Post-Shanghai: Online Forum by Staking Rewards" width="500" height="281" src="https://www.youtube.com/embed/P9TY0MdpN2U?start=9614&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>
</div></figure>



<p><em><strong>If you like conversations like these, check out our biggest Staking Summit yet. On November 10th, 2023, we’re hosting a 2-day summit in Istanbul. Don’t miss out; early-bird tickets are going fast. Learn more&nbsp;<a href="https://bit.ly/3JqDRH1">here</a>.</strong></em></p>



<p></p>



<h2 class="wp-block-heading">1. Staking and Validator Pools</h2>



<p><strong>1.1 Benefits</strong></p>



<p>Staking has become an essential aspect of Ethereum as it transitioned to a PoS consensus mechanism. The panelists discussed the benefits of staking, emphasizing its role in enhancing network security and offering opportunities for participants to earn rewards.</p>



<p>Validator pools provide a solution for individuals who might not have the required 32 ETH to become a solo validator. By pooling their assets, smaller stakers can participate in the network and earn rewards proportionate to their contributions. This model fosters greater decentralization, as more participants can join the staking ecosystem.</p>



<p><strong>1.2. Challenges of decentralization in validator pools</strong></p>



<p>While validator pools promote decentralization, the panelists also highlighted the challenges they face, such as the risk of centralization among large staking providers. These providers may accumulate considerable control over the network, making it essential to encourage smaller and independent validators.</p>



<p>Another challenge is ensuring that validator pools maintain proper security measures and adhere to best practices to minimize the risk of slashing penalties. To address these issues, the panelists discussed the need for transparency, education, and community involvement.</p>



<p><strong>1.3. Security and trust considerations</strong></p>



<p>The panelists emphasized the importance of building trust within the staking ecosystem. They argued that trust should come from credible neutrality and transparency in the infrastructure layer, while permissionless innovation should be encouraged at the application level.</p>



<p>Projects must strike a balance between decentralization and security, ensuring that they do not compromise on either. Additionally, the panelists highlighted the need to make the staking process as user-friendly as possible so that even non-technical users can participate and contribute to the network&#8217;s decentralization.</p>



<p><strong>1.4. Protocol-level improvements</strong></p>



<p>The discussion also touched upon potential improvements at the protocol level, such as improving the validator selection algorithm to better distribute rewards and responsibilities among stakers. Panelists mentioned that the Ethereum community should continue working on scalability solutions and layer 2 technologies to enhance the overall functionality and efficiency of the network.</p>



<p></p>



<h2 class="wp-block-heading">2. Building Communities and Governance</h2>



<p><strong>2.1. Decentralizing project governance</strong></p>



<p>The panelists discussed their approaches to decentralizing their projects, stressing the importance of community-driven decision-making. By involving the community in critical decisions, power, and control are distributed more evenly, leading to a healthier ecosystem.</p>



<p>The community should govern open-source projects and public goods to ensure that they align with Ethereum&#8217;s ethos of decentralization. This approach may introduce short-term complexity but will result in long-term stability and robustness.</p>



<p><strong>2.2. Balancing innovation and trust</strong></p>



<p>The panel highlighted the need to maintain a balance between innovation and trust. While trust should be grounded in credible neutrality at the infrastructure level, innovation should be fostered through permissionless and opinionated development at the application level.</p>



<p>This separation allows for rapid progress in the ecosystem without being hindered by excessive governance. The panelists agreed that Ethereum should continue to evolve and innovate, while individual projects should take calculated risks to drive the ecosystem forward.</p>



<p><strong>2.3. The future of Ethereum staking and decentralization</strong></p>



<p>The panel concluded with a forward-looking perspective on Ethereum staking and decentralization. They acknowledged the need for continuous improvement at the protocol and application levels to ensure that Ethereum remains a robust and decentralized platform.</p>



<h2 class="wp-block-heading">3. Layer 2 Scaling Solutions</h2>



<p><strong>3.1. The role of Layer 2 in Ethereum&#8217;s future</strong></p>



<p>The panelists discussed the significance of Layer 2 scaling solutions in Ethereum&#8217;s future. They agreed that Layer 2 technologies are crucial to achieving better scalability and lower transaction costs, which are necessary to make Ethereum more accessible to a broader user base.</p>



<p>These solutions will complement the transition to PoS, providing immediate benefits for users and developers. As Layer 2 solutions mature, they will help unleash the full potential of decentralized applications built on the Ethereum network.</p>



<p><strong>3.2. Challenges in Layer 2 Adoption</strong></p>



<p>Despite the promising potential of Layer 2 technologies, the panelists acknowledged the challenges in their adoption. One significant hurdle is the user experience, as Layer 2 solutions often require additional steps for users to move assets between layers.</p>



<p>Another challenge is the liquidity and user base fragmentation across different Layer 2 solutions. This issue could lead to the creation of siloed ecosystems instead of a unified, interconnected network.</p>



<p><strong>3.3. Collaboration and interoperability</strong></p>



<p>To overcome the challenges of Layer 2 adoption, the panelists stressed the importance of collaboration and interoperability between different solutions. Building bridges between Layer 2 technologies and fostering a collaborative environment will enable seamless interaction and help prevent fragmentation.</p>



<p>Moreover, the panelists highlighted the role of EIPs in driving innovation and ensuring that Layer 2 solutions remain compatible with the broader Ethereum ecosystem.</p>



<h2 class="wp-block-heading">4. Ethereum Ecosystem Adoption</h2>



<p><strong>4.1. NFTs as a driver for mainstream adoption</strong></p>



<p>The panelists touched upon the role of NFTs as a catalyst for the mainstream adoption of Ethereum and blockchain technology. They noted that NFTs had captured the attention of various industries, such as art, gaming, and collectibles, providing new opportunities for creators and users alike.</p>



<p>This interest has the potential to drive increased demand for Ethereum-based platforms and services, further expanding the network&#8217;s user base and solidifying its position in the market.</p>



<p><strong>4.2. DeFi and the future of finance</strong></p>



<p>DeFi was another important topic during the panel discussion. The panelists emphasized the transformative potential of DeFi in reshaping traditional finance, offering accessible and open financial services to people worldwide.</p>



<p>However, they also acknowledged the challenges DeFi faces, such as regulatory uncertainty and security concerns. As the DeFi ecosystem evolves, it must address these challenges to unlock its full potential and deliver on its promise of a more inclusive and equitable financial system.</p>



<p><strong>4.3. Collaboration and cross-pollination</strong></p>



<p>The panelists concluded by highlighting the importance of collaboration and cross-pollination between different sectors of the Ethereum ecosystem. NFTs, DeFi, Layer 2 solutions, and staking are all interconnected components that can help drive the platform&#8217;s growth.</p>



<p>By fostering a collaborative environment and encouraging experimentation, the Ethereum ecosystem can continue to innovate, expand, and push the boundaries of what is possible with blockchain technology.</p>



<h2 class="wp-block-heading">Final Thoughts</h2>



<p>The panel&#8217;s conversation on developing a decentralized future offers valuable insights into the opportunities and challenges. Understanding these key takeaways and considering their implications can help stakeholders make informed decisions as they navigate the evolving landscape of Ethereum staking. For future conversations like this, check out our&nbsp;<a href="http://bit.ly/3JqDRH1">Staking Summit 2023</a>. </p>


Staking Innovations: Securing a Decentralized Future


<h2 class="wp-block-heading">Key Takeaways</h2>



<ul>
<li>The Shanghai Upgrade is a significant event for the ecosystem, leading to several changes, including the introduction of withdrawals.</li>



<li>Withdrawals after the Shanghai Upgrade involve several considerations, such as the withdrawal queue, timelocks, and partial and full withdrawals.</li>



<li>The market for liquid staking tokens could change after Shanghai, with potential opportunities and challenges for existing players and new entrants.</li>



<li>Vampire attacks may emerge as a competitive strategy in the liquid staking space, allowing upstarts to challenge incumbents.</li>



<li>Validators may face a conundrum regarding rekeying versus maximizing the chances of receiving retroactive airdrops.</li>



<li>Tax implications could lead to various scenarios, depending on individual jurisdictions and stakers&#8217; tax payment strategies.</li>



<li>Trusted hardware like Intel SGX paly a role in helping prevent slashing incidents and possibly enable more validator insurance options.</li>



<li>Potential hack scenarios and suggested responses in case a validator&#8217;s withdrawal key is compromised.</li>
</ul>



<p>The Ethereum Shanghai Upgrade is an eagerly anticipated event with significant implications for the Ethereum ecosystem as it introduces withdrawal functionality for staked ETH. In a recent keynote, during the&nbsp;<a href="https://bit.ly/42GS8Iq">Staking Rewards Institutional Ethereum Staking Forum</a>, Ethereum researcher Justin Drake from the Ethereum Foundation discussed various aspects of the upgrade, highlighting key takeaways and providing valuable insights for validators, stakers, and others in the space. This article summarizes and analyzes the main points from Drake&#8217;s presentation.</p>



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Institutional ETH Staking Post-Shanghai: Online Forum by Staking Rewards" width="500" height="281" src="https://www.youtube.com/embed/P9TY0MdpN2U?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>
</div></figure>



<p><em><strong>If you like conversations like these, check out our biggest Staking Summit yet. On November 10th, 2023, we’re hosting a 2-day summit in Istanbul. Don’t miss out; early-bird tickets are going fast. Learn more&nbsp;<a href="https://bit.ly/3JqDRH1">here</a>.</strong></em></p>



<h2 class="wp-block-heading">Withdrawals after the Shanghai Upgrade</h2>



<p>Withdrawals after the Shanghai Upgrade will likely involve several considerations, such as the withdrawal queue, timelocks, and partial withdrawals. Validators must be aware of these factors when planning their withdrawal strategies.</p>



<ul>
<li>Withdrawal queue: Validators may experience delays in receiving their withdrawn Ether due to a queue. Validators can mitigate this risk by timing their withdrawals strategically or using liquid staking solutions.</li>



<li>Timelocks: Drake suggests that validators should consider using timelocks to protect themselves from potential attacks. A timelock would require the attacker to wait for a predefined period before accessing the compromised funds, giving the validator time to respond.</li>



<li>Partial withdrawals: Validators may want to opt for partial withdrawals to maximize their chances of receiving retroactive airdrops. By keeping some ETH staked, validators can continue participating in the network and maintain airdrop eligibility.</li>
</ul>



<h2 class="wp-block-heading">Liquid Staking Market Dynamics</h2>



<p>The market for liquid staking tokens could change after Shanghai Upgrade, with potential opportunities and challenges for existing players and new entrants.</p>



<ul>
<li>Post-Shanghai liquidity: The Shanghai Upgrade could increase the demand for liquid staking tokens, as validators will be able to withdraw their ETH and rewards, creating more liquidity in the market.</li>



<li>Competitive landscape: As new players enter the liquid staking space, existing platforms will need to adapt and innovate to maintain their competitive edge. This may involve offering additional services, a better user experience, and improved security features.</li>



<li>Composability: Drake highlighted the importance of composability in the DeFi ecosystem. Liquid staking platforms that can seamlessly integrate with other DeFi protocols will likely have a competitive advantage.</li>
</ul>



<h2 class="wp-block-heading">Vampire Attacks in Liquid Staking</h2>



<p>Vampire attacks may emerge as a competitive strategy in the liquid staking space, allowing upstarts to challenge incumbents. These attacks involve newcomers incentivizing users to migrate their assets from an existing platform to their platform by offering lucrative rewards.</p>



<ul>
<li>Incentives: New entrants could offer higher staking rewards, better user experience, and additional services to attract users away from existing platforms. They could also capitalize on existing platform vulnerabilities or shortcomings to further incentivize migration.</li>



<li>Defense strategies: Incumbents like Lido can defend against vampire attacks by continuously improving their offerings, maintaining strong security measures, and fostering a loyal user base. Building partnerships and integrating with other DeFi protocols can also help them maintain a competitive edge.</li>



<li>Long-term implications: While vampire attacks can lead to short-term disruptions in the liquid staking market, they can also drive innovation and competition. Platforms that can adapt and continuously improve will likely thrive in this rapidly evolving ecosystem.</li>
</ul>



<h2 class="wp-block-heading">Rekeying vs. Airdrops</h2>



<p>Validators may face a conundrum regarding rekeying versus maximizing the chances of receiving retroactive airdrops. Rekeying involves changing the withdrawal credentials of a validator, providing increased security. However, doing so could potentially make the validator ineligible for some airdrops.</p>



<ul>
<li>Security benefits: Rekeying provides added protection against potential hacks and the misuse of validator keys. Validators prioritizing security may choose to rekey regularly, despite the potential impact on airdrop eligibility.</li>



<li>Airdrop considerations: Retroactive airdrops can offer substantial rewards to validators, but the eligibility criteria and timing may vary for each airdrop. Validators who value these rewards may choose to delay rekeying to maximize their chances of receiving airdrops.</li>



<li>Decision-making factors: Validators should consider the likelihood of receiving airdrops, the potential value of those rewards, and the security risks associated with not rekeying when deciding their approach. It&#8217;s essential to strike a balance between securing validator keys and optimizing for potential airdrop rewards.</li>
</ul>



<h2 class="wp-block-heading">Tax Implications of the Ethereum Shanghai Upgrade&nbsp;</h2>



<p>The tax implications of the Ethereum Shanghai Upgrade could lead to various scenarios, depending on individual jurisdictions and stakers&#8217; tax payment strategies.</p>



<ul>
<li>Realized vs. unrealized gains: In some jurisdictions, the conversion from staked ETH to staking derivatives could be considered a taxable event. This may result in validators paying taxes on realized gains, even if they have not withdrawn their staked assets.</li>



<li>Withdrawal strategies: Validators could delay withdrawals to minimize tax liability or withdraw gradually to avoid triggering higher tax rates. Conversely, they may withdraw immediately to lock in gains, anticipating future increases in tax rates or regulatory changes.</li>



<li>Jurisdictional differences: Tax regulations vary across countries, and validators should be aware of the rules and rates in their specific jurisdiction. Some countries may have more favorable tax treatment for crypto assets, while others may impose higher taxes or have stricter reporting requirements.</li>



<li>Planning for the future: It&#8217;s crucial for validators to consider the tax implications of their staking activities and develop strategies to minimize their tax burden while remaining compliant with local regulations. Consulting a tax professional familiar with cryptocurrency regulations can help navigate these complex issues.</li>
</ul>



<h2 class="wp-block-heading">Trusted Hardware and Anti-Slashing</h2>



<p>The role of trusted hardware, like Intel SGX, is becoming more prominent in preventing slashing incidents and possibly enabling more insurance options for validators.</p>



<ul>
<li>Enhanced security: Trusted hardware offers an additional layer of security for staking keys, protecting them from potential hacks and insider threats. Intel SGX, for example, provides a secure enclave for staking keys, ensuring they cannot be accessed or misused by unauthorized parties.</li>



<li>Anti-slashing benefits: Using trusted hardware can help prevent slashing incidents by ensuring that validators do not sign conflicting messages. This is particularly valuable for liquid staking providers, who can offer their users additional security guarantees.</li>



<li>Insurance implications: Validators using trusted hardware, like Intel SGX, could be more attractive to insurance providers. The secure enclave&#8217;s cryptographic attestation could prove that staking keys were generated within a trusted environment, potentially unlocking decentralized insurance options or providing higher guarantees to centralized insurers.</li>



<li>Wider adoption: As trusted hardware becomes more prevalent in the staking ecosystem, more validators will likely adopt these solutions, further increasing the security and trustworthiness of the overall network.</li>
</ul>



<h2 class="wp-block-heading">Potential Hack Scenarios and Suggested Responses</h2>



<p>Validators must be prepared for potential hack scenarios and have a plan in place for responding to compromised withdrawal keys. Justin Drake outlined three different types of hacking scenarios:</p>



<ul>
<li>Validator withdrawal key (BLS) hack (XX00): In this scenario, the attacker gains access to the validator&#8217;s BLS withdrawal key, enabling them to withdraw the staked funds.</li>



<li>Ethereum address withdrawal key hack (XX01): The attacker compromises the validator&#8217;s Ethereum address withdrawal key, allowing them to intercept withdrawn funds before they reach the intended recipient. In this situation, Drake suggests creating a transaction that sends the entire hacked balance as a priority fee (MEV Boost) to the next validator. This would incentivize the next validator to pick up the transaction, potentially preventing the attacker from receiving the funds. Validators could then attempt to recover the funds by providing proof of ownership to the next validator.</li>



<li>Ransom attack: An attacker threatens to slash a validator&#8217;s stake unless a ransom is paid. Validators must weigh the risks and potential losses associated with paying the ransom versus the possibility of losing their stake through slashing.</li>
</ul>



<h2 class="wp-block-heading">Final Thoughts</h2>



<p>Justin Drake&#8217;s presentation on the Ethereum Shanghai Upgrade offers valuable insights into the potential opportunities, challenges, and risks that validators and the broader ecosystem may face. Understanding these key takeaways and considering their implications can help stakeholders make informed decisions as they navigate the evolving landscape of Ethereum staking. For future conversations like this, check out our&nbsp;<a href="http://bit.ly/3JqDRH1">Staking Summit 2023</a>.</p>


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