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Ethereum staking options are actively growing in value

12 December 2022

Demand has been increasing since Ethereum switcheds to a new consensus algorithm.

After the transition of Ethereum from the Proof-of-Work algorithm to the Proof-of-Stake algorithm, which implies currency staking rather than mining, users began actively buying options for ETH staking . An option is a derivative, a financial instrument based on a certain asset. In this case, the asset is Ethereum. The option allows you to either buy or sell the asset on which it is based at a certain value on a certain date. An opportunity to stake and profit from cryptocurrency content on your Internet-connected wallet.

Ethereum staking is the first profitable instrument to reach a massive scale within the decentralized blockchain network. There are more than 15.4 million Ethereum coins in ETH staking contracts. This amount gives a head start to all liquidity provider companies, that is, free coins of a particular cryptocurrency and market makers.

As a reminder, after the transition to the new consensus algorithm, Ethereum replaced the miners with validators. Each validator had to contribute 32 ETH to check new blocks and receive a reward. If the user did not have so many Ethereum coins, they could participate in the combined pool. In practice, this means that several users, by joining their efforts and contributing different amounts, which eventually exceeded 32 ETH, are considered validators by the network. The reward for checking the block will be paid to pool participants according to the number of funds they offered for staking.

Pools for staking in the Ethereum network are more user-friendly than in many other networks since they allow you to withdraw your money anytime. This fact undoubtedly appealed to the owners of Ethereum: more than 40% of the coins from the ecosystem participating in staking are now in the Rocket Pool and Lido staking pools. This is almost 6 million coins! Lido pool is the leader, with a share of 79%. Nevertheless, such a percentage did not provide explosive growth to the pool: over the past three months, Lido’s competitors  – Rocket Pool (by 52.5%) and Coinbase (43.3%) –  have been actively growing.