Risk and Reward in Staking Ethereum 2.0

Risk and Reward in Staking Ethereum 2.0

A recent survey conducted by ConsenSys Codefi, has highlighted the various levels of understanding and concerns regarding staking on Ethereum 2.0 once it moves to a Proof of Stake (PoS) model.

In compiling the free to download May 2020 Ethereum 2.0 Staking Ecosystem Report the authors – ConsenSys Codefi Global Strategy Lead, Mara Schmiedt, the company’s User Research Lead, Georgia Rakusen, and Global DeFi Strategist Colin Myers – contacted around 300 ETH holders to identify their motivations and intentions regarding the transition in order to better inform all of the ecosystem participants and stakeholders.

Ethereum Evolves

Formed in 2014 by Ethereum co-founder Joseph Lubin and now with offices in more than 30 countries, ConsenSys have various divisions and are active in designing Ethereum Enterprise solutions to build developer tools and incubate startups for multiple industry and governmental sectors centred around the key fundamentals of assets, payments, networks, and data.

Last year, ConsenSys’ Media division provided a short guide to the historic and proposed future evolution of Ethereum.

As any PoS network is dependent upon the willingness of users to stake their tokens, Codefi’s latest 40 page report seeks to explain the motivations and preferences of ETH holders so as to “…inform key design and product considerations to encourage the broadest possible participation from different user personas…” and to determine “…how their participation in Ethereum 2.0 can be accelerated and optimised.”

It is perhaps interesting to note that while around a third of respondents to the survey indicated they were considering running their own Ethereum 2.0 node, a similar number were looking to use a third party staking provider.

As a node is expected to require a minimum of 32 ETH, those with smaller amounts will have to rely on a third party.

To Stake or Not to Stake

Although not specifically covered in the report, the growing interest in staking among those with smaller holdings in ETH has been reflected in the surge in trading volume for Rocket Pool (RPL) – a company who will provide a facility for anyone with a single ETH to a thousand ETH to stake on their platform – which has seen a price increase of 470% over the last month.

The growing awareness of users to the possibility of earning a passive income through staking ETH that exceeds any available from traditional bank accounts may have contributed to that price rise.

An ETH 2.0 staking calculator has been released by Ethereumprice.org – which was developed using an open source Google sheet created by Colin Myers – to help indicate the possible returns for holders committing their ETH to the PoS network.

Anyone wishing for a deeper dive into the Codefi Network’s capabilities, the evolution of Proof of Stake, and the benefits of staking can register for a live webinar scheduled for Tuesday 19 May at 1pm ET, which will be presented by Mara Schmiedt.