Lately, we have been getting some of the DeFi summer vibes with low liquidity. This comes from many layer two projects built on Ethereum and Defi protocol building on them.
This has helped to lower the barrier for Degens and airdrop hunters typically.
The DeFi summer boom, for example, started with liquidity mining. Projects allocated tokens to community members and investors who provided liquid assets in the project pool or staking pool.
We have seen many new protocols promising rewards for staking or providing liquidity, and Ether Finance is not exempted.
This is a good thing, but the risks of rug pulls, exploits, and rewarded tokens becoming worthless are very high, with the most recent exploit being Sushiswap.
The habit of having hot wallets for interactions and cold wallets for storage is now a culture but is that enough precaution for Defi researchers, investors or even the degens to stay safe?
Regardless Defi is an awesome place to be, for the freedom, financial rewards and the opportunities in this space can be amazing.
ETH liquid staking services
ETH liquid staking services like Lido, Stakewise and RocketPool have made staking accusable to investors most importantly staking on the Beacon chain would have been very discouraging because it requires expert knowledge and costly infrastructure to be put in place in others to participate in Ethereum’s proof of stake consensus mechanism.
Apart from that, there are also slashing and offline penalties if the staking is managed improperly.
Let’s not forget that self-staking requires a minimum deposit of 32 ETH and a token lock-up which could last years; this was the idea before the Etherem Shanghai upgrade.
Ethereum will soon be the biggest staking economy in space with Shanghai’s upgrade; with the upgrade, short-term investors will consider staking on Ethereum since Eth can now be fully un-staked, and the Eth rewards can now be claimed and withdrawn.
TABLE OF CONTENTS
DIP DIVE INTO ETHER FINANCE
Ether finance is an Ethereum liquid staking protocol that allows stakers to retain control of their keys. At the same time, they delegate their ETH and mints a derivative ETH called eEth to utilise in other Defi platform or swap it back for ETH.
Ether finance can be seen as a marketplace for stakers, Node operators, and Node services.
A staker is anyone who has deposited assets for consensus purposes.
There are two types of stakers
- Bondholders – This was designed for stakers with 32ETH who can not endure the stress of self-staking their assets.
The staker deposits their 32 ETH into the ether finance contract. Then, a node operator is chosen from the pool of node operators to run the validator.
The staker key is encrypted, and two NFTs are created from the 32 staked Eth.
The 30ETH is minted as T-NFT and is transferable, while the remaining 2Eth is minted as B-NFT and is also a soul-bound token.
This confers ownership of the withdrawal safe.
The stakes can exit or recover the staked ETH from the validator; this is only possible because the staker has the keys and can also burn the NFTs to recover their ETH net of fees. For the 2Eth to be recovered, the validator has to exit or entirely withdraw from staking, which can be done at any time.
It is important to note that stakers validators keys are encrypted with the public key of the winning node operator and submitted as an on-chain transaction. The Bondholders must manage validator keys and perform monitoring duties of their validator nodes; their earnings are also shared with the node operator.
- LSD (Liquid Staking Derivative) Holders are not mandated to stake 32Eth but earn staking rewards according to their deposit. eEth is minted into the depositor’s wallet and can be swapped back to ETH at any time.The best thing about the LSD holder is that they do not have to manage the validator keys or monitor the node operator.
The node operator submits a bid to indicate the availability and interest to be assigned a validator node to run; this is after first generating public encryption keys.
The node operator launches the validator by utilising the decrypted validator key and performs all the technical implementation required to maintain the Ethereum node.
This also allows for a node services marketplace where stakers and node operators can enrol nodes to provide infrastructure services.
This part of the platform has not yet been truly figured out.
THE RISK ASSOCIATED WITH UTILISING ETHER FINANCE
- It is important to note that most of Ether finance features still in the beta stage.
The first risk that every Degen or Defi investor should be aware of is one relating to Smart contract exploit though the ether team have promised to have carefully written, tested and audited.
Ether finance audited results from Certik and Zellic.
- With ether.fi’s desktop and decentralised web applications, we’ve taken great care to utilise the latest, safest methods for key encryption and protection.
Ether.fi cannot guarantee our methods are secure. The care for one’s keys remains in the staker’s hands, so preventing user error, though a primary aim, is impossible.
- As for now, server providers and cloud service providers have become more friendly to validators utilising their servers and services to participate in blockchain networks or decentralised networks. However, this doesn’t remove the fact that this service would have to follow the regulations of their host countries.
These restrictions or bans can include restriction or ban on cloud service providers providing services to crypto-related enterprises and bans on ISPs providing crypto-related services.
How to earn from the Ether Finance Early adopter program
The first step is to connect your funded wallet to Ether Finance.
Your wallet can be funded with Eth, and other derivatives such as wstETH, rETH, sfrxETH, cbETH
You can deposit ETH or other derivatives such as wstETH, rETH, sfrxETH, and cbETH to earn bonus points.
All bonus points will be able to migrate to EtherFi staking at the end of the Early adopter program.
Enter the amount of token you are willing to deposit and click on deposit now. Your gas will be paid in ETH to ensure enough for the transaction.
Confirm the transaction on your wallet, and we are good to go.
At the time of writing, the claim reward button doesn’t work and withdrawing your asset will lead you to lose your points.
Your points refer to rewards as an early adopter, and the boost refers to the multiply.
It is also important to note that your point will reset after each deposit.
I will advise you to deposit with a new wallet if you want to stake more tokens after your first deposit.
Ether finance is a beautiful DeFi innovation and a step forward in ETH liquid staking.
It’s important to note that every feature is not yet built out and in its beta stage, so play with what you can afford to lose at any time.
This article should not be seen as financial advice.