Ethereum staking is a fantastic way to earn passive income without having to sell. All you need to do is deposit coins for a fixed period of time to earn interest. This investment vehicle doesn’t come without risks, but when it is done right, it can be a great source of passive income. The following discussion will explore the easiest ways to stake Ethereum and discuss if you should do it.
Easiest Way to Stake Ethereum TL;DR
Multichain crypto wallet Omni is the easiest way to stake Ethereum; however, other notable methods include the use of centralized exchanges and pooled staking. This being said, centralized exchanges will take a cut of your rewards, so the easiest way to make the most from Ethereum staking is Omni.
The ability for users to start staking in a few taps and participate in liquid staking from the comfort of a self-custodial mobile Web3 wallet makes Omni a simple yet effective choice.
What is Ethereum Staking?
Staking is regarded as a public good for the Ethereum ecosystem. It involves locking up ETH to secure the network and earn rewards in the process. Currently, more than 14.5 million total ETH is staked, a significant portion of the entire circulating supply.
A proof-of-stake (PoS) protocol is a type of cryptocurrency consensus mechanism that is responsible for processing transactions and creating new blocks in a blockchain. In a PoS model, validators stake capital in the form of ETH into a smart contract on the Ethereum blockchain. If a validator acts dishonestly or carelessly, the staked ETH serves as collateral that may be lost.
The validator is in charge of ensuring that newly created blocks are validly propagated throughout the network as well as occasionally producing and propagating new blocks. In other words, validators, and the ETH they stake, play a significant role in the health and longevity of the Ethereum ecosystem.
How Much Do You Make Staking Ethereum?
Overall, the amount you can make staking Ethereum varies. Currently, validators that have activated validator software and have deposited 32 ETH are able to earn 4.1% APR. Alternatively, on other DeFi applications and interfaces such as Omni, users can often earn more interest. Many of these apps top out at about 5.3% APR, but higher rates aren’t unheard of, although those usually incur greater risk.
Easiest Way to Stake Ethereum
You can stake ETH in a variety of ways. The option you choose will largely depend on how much ETH you are willing to stake and whether or not you choose to use a centralized or decentralized platform.
Staking Via Omni Crypto Wallet
The easiest way to stake your Ethereum is through Omni — an easy-to-use, highly functional and self-custodial Web3 mobile wallet. The app boasts a straightforward user interface that allows users to efficiently navigate through all its features. The account set-up process is simple and can be done in a matter of minutes. Staking, token swaps and bridges can all be completed from the mobile application. After creating an account, users can earn up to 5.3% APR for ETH in a matter of seconds. Omni offers three unique ways to earn ETH rewards — regular staking, liquid staking or yield vaults. Moreover, Omni gives users the flexibility to use over 25 different blockchains, with staking support available for many tokens other than Ether.
Omni’s support for liquid staking further adds to the simplicity of staking ETH on the platform. It allows users to earn interest on ETH while keeping their assets liquid, which is advantageous for multiple reasons. It minimizes commitment costs because liquid staking allows users to stake any amount, making Omni inclusive for all. Staking opens the door to yield farming where users can choose to earn yield through other decentralized (DeFi) lending strategies simultaneously.
Centralized Exchanges
Many centralized exchanges (CEX) such as Coinbase Global Inc. (NASDAQ: COIN) provide staking services if you are not comfortable with holding ETH in your own wallet, allowing you to earn yield on your ETH with minimal effort or oversight.
However, the implication here is that centralized providers consolidate pools of ETH to run a large number of validators. This practice is dangerous for users of the network because it creates a large centralized target and point of failure, making the network more susceptible to attacks or bugs. Also, Coinbase takes a whopping 25% cut of your staking rewards!
Pooled Staking
If you want to stake up to 32 ETH but don’t feel comfortable with solo staking, you can take part in several pooling solutions that exist to assist users. Staking pools are a collaborative approach that allows those with smaller amounts of ETH to obtain the 32 ETH required to activate a set of validator keys.
Many of these choices involve liquid staking, which entails using an ERC-20 liquidity token to symbolize your staked ETH. Pooled staking is not a part of the Ethereum network; therefore, you run the danger of these solutions being developed by outside parties, which is a risk.
Risks of Staking Ethereum
Staking ETH is experimental and carries some significant risks. Therefore, it’s critical that you comprehend, evaluate and accept the associated risks before opting to bet.
The potential loss of your staked ETH from slashing is a significant risk. Slashing is a protocol-level punishment connected to a network or validator failure. In other words, if a validator violates the rules, the network destroys some of that validator’s coins.
Another significant danger is that until the lockup period is ended, you are unable to sell your ETH to lock in profits or stop additional losses. However, this risk can be bypassed through the use of Omni. Omni offers the opportunity for investors to participate in liquid staking — a form of staking that enables you to earn rewards without losing access to your funds.
Is Staking Ethereum Worth it?
Overall, there are three primary reasons to stake Ethereum.
Staking is a passive way to earn rewards on idle ETH because users that stake ETH are compensated for helping secure the network. ETH staking rewards are given in accordance with how much ETH is validated and what rewards the network is offering over the time period. When there is little ETH staked, the protocol rewards will be greater as an incentive for more ETH to come online. Conversely, if an increasing amount of ETH is staked, the reward will be reduced. Check out the current amount of ETH staked and current APR before you decide to stake.
Staking Ethereum contributes to the overall security of the network because the network becomes stronger against attacks as more ETH is staked, as it then requires a larger amount of ETH to control a majority of the network. As a result, staking Ethereum benefits the wider community and all individuals in the Ethereum ecosystem.
If you choose to participate in staking, using Omni is a great choice. It is compatible with a variety of software and hardware wallets such as Ledger. By downloading the application, you can start earning over 5% APR on Ethereum through regular staking, liquid staking or yield vaults.