Staked ether or stETH, is a token that is supposed to be the same value as ether. A stETH has been trading as far as 0.92 ETH, which is almost an 8% discount for the past few weeks.
Highlights
- Staked ether is a token of ether when processes for validation
- Celsius is the leading network for trading stETH
What is staked ether?
Staked ether is a unit of ether that is deposited or “staked” in what is called a “beacon chain”. In short, stacked ether is represented as stETH.
Staking is a process in which users lock up any quantity of ether they have to help secure the network and earn rewards in the process. This is different from mining as this doesn’t require the computing power of many graphics cards or something. The process of mining is called “proof of work”, but the staking process is called “proof of stake”.
For the user to upgrade from Ethereum to Ethereum 2.0, they need to stake at least 32 ETH in the network so that it will upgrade.
Lido finance is a platform that let users stake any amount of ETH and in exchange, it gives users stETH, a token, in return.
Why stake?
Staking the ether or Eth helps the network to build strong security against cyberattacks. The more ETH the network has the more security is needed to control the ETH in the network. If the attacker wants to control the network, they need to control the majority of the ETH in the system and hold the majority of validators, which is a lot to handle.
Unlike mining, staking is an energy-efficient process and doesn’t require a lot of high-quality hardware. Staking can be done with a laptop or home computer or even a smartphone.
How to stake?
Firstly. you need at least 32 ETH to even activate your validator and you can even stake more.
Staking can be done in many ways: –
- Solo home staking
Solo staking is the best way of staking on Ethereum. This way you get the full rewards and help improve the network’s decentralization. This way user doesn’t need to entrust their ETH to anyone else.
Solo Staking requires at least 32 ETH and a private computer with a 24/7 internet connection. Users should know somewhat of the technical stuff but there are process easy to understand.
- Staking as a service
If the user is not comfortable with hardware or doesn’t want to use the internet themselves, they can still stake their 32 ETH, staking as a service helps the user to delegate the work and leave the hard part to the experts. This way they will earn the basic rewards without much hassle.
This process of staking needs the user to trust the service provider. But there is certain security as the key to withdrawal is in the hands of the user.
- Pooled staking
This type of staking is very different from the above-mentioned process. In this process user collab with the other validators and let them trade your ETH. You get the liquidity token and rewards.
This process also requires a certain of trust but you can always track where the validator has invested your ETH.
These are the most used ways of staking the ETH. There are many other ways of staking but these 3 are the most reliable.
Reason for the Staked ether downfall
The main reason behind the downfall of the staked was the imploding of the terra stablecoin project. After the imploding of terra stablecoin, stETH prices were trading at a lower cost than the ether. This trading of stETH at a lower cost made the investors liquidity their ether.
Due to the investor’s exits, crypto lender Celsius begin to halt investor account withdrawals, which made the stETH value goes even lower than before.
Celsius is the leading network that holds the trade of stETH. It has more than $400 million worth of stETH deposits. These withdrawals from the investors can even lead Celsius to sell stETH and that will lead to an even downward value of stETH.
Read more: – What you need to know about staked ether, the token at the center of crypto’s liquidity crisis
