In-depth analysis of the current status and future development of Ethereum staking

The present and future of Ethereum staking can be summarized into the following four aspects:

• Market Leader

• Best yield

• trend

• Catalyst for the future

ETH has the best Tokenomics in Crypto. If it still uses the PoW algorithm, $4.7 billion worth of ETH will be issued - more than $UNI's total market cap of $4 billion. In addition, ETH's supply is constantly decreasing and is in a deflationary state because we are still in a bear market phase.

ETH has the lowest staking rate (14.8%), while offering a competitive annual interest rate of about 4.5%. In contrast, the token distribution of other blockchains is much more concentrated, with insiders, teams, and early investors actively staking for returns, which also means that more ETH can (and will) be locked.

Ethereum’s newly built staking infrastructure is also one of the reasons for its low staking rate. Among them, Lido leads with a staking rate of 30%, followed by centralized exchanges Coinbase (12.5%), Kraken (6.8%), and Binance (5.4%). In the future, I hope that staking can become more decentralized.

This is exactly what is happening — Kraken, Coinbase, and Huobi have lost market share over the past month. In fact, 36% of all ETH staking withdrawals come from Kraken.

For ETH, staking withdrawals are considered a bearish signal. More withdrawals than deposits mean long-term holders are selling, and in fact, net inflows have been negative since the Shanghai upgrade.

Currently, about 40% of ETH stakers have negative ETH PnL, and 29% have staked their ETH at current prices. Correct me if I'm wrong, but this sounds like a bullish signal to me.

Staking ETH is the best risk-return-adjusted opportunity to achieve financial freedom, and I recommend doing it in the following order of priority:

Protect ETH deposits

· Leave it alone

Maximize ETH earnings

Don't pursue the highest rate of return, but protect your ETH principal from hacker attacks and vulnerabilities.

If you want to protect your principal, consider using a blue chip DeFi protocol or a top CEX. Those who hold the opposite view believe that if your principal is less than $10,000, then you are better off staking on a CEX or not staking at all, because the on-chain transaction fees of staking may eat up all the gains.

Liquidity staking derivatives are one of the best ways to earn yield. I would recommend stETH or rETH because of their high adoption in DeFi. You can lend stETH/rETH, borrow stablecoins to pay for daily needs, and let the yield pay off your debt, so you can probably get an average of 4-5% APY.

With Rocket Pool, you can run your own node to earn 7.01% APR + RPL rewards. This is great for individuals looking for low-risk node operations, but you need some professional skills. However, there are risks in doing so - if there is a problem with the node, you will also lose money.

You can also increase your yield through leveraged staking, yield aggregators, and farms. For example, Instadapp Lite offers 8.5% APY. It converts ETH into stETH and leverages it for PoS staking against standard ETH for higher rewards.

Currently, there are 83 protocols available for ETH staking, and their TVL is about to surpass DEX. Although only 15% of ETH is staked, the scale of liquid staking derivatives is larger than lending, cross-chain bridges, and CDP stablecoins. Not only that, it will continue to grow.

In addition, there is a new generation of staking protocols coming soon. If you like taking risks, you can get more than 50% APY. In this regard, my suggestion is that you can earn income by investing in their tokens instead of taking risks with your best chance to achieve financial freedom - ETH principal.

Eigenlayer is probably one of the most watched protocols that increases the security of other networks through re-staking. The protocol will increase the demand for ETH staking, but the risk will also double.

Distributed Verification Technology (DVT) is another development direction. Currently, running an Ethereum node requires 32 ETH and has high technical requirements. DVT simplifies this process by enabling "squad staking", allowing teams to collectively stake different amounts of ETH.

Currently, there are several protocols working to simplify staking while increasing decentralization and security, including:

· divalabs

Obol Labs

ether.fi

· Stakehouse

· ssv network

Ethereum is considered the best choice for financial freedom in Crypto. Currently, 5-9% APY can be safely obtained on ETH, but since it is a bear market now, the on-chain activity is low, and when the bull market comes, the gas usage will surge, thereby increasing the staking income and the destruction of ETH.

Higher yields increase the passive income appeal of ETH, driving the price up. Although we may need to sacrifice some yield, the ultimate goal is to protect the principal of ETH. In order to get the most upside and reduce risk, I would bet on LSD/DVT Token.

As for the best Token to bet on, this is another topic that we will discuss later.