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Renowned analyst DeFi Ignas writes | Best option for financial freedom: Ethereum staking

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Renowned analyst DeFi Ignas writes | Best option for financial freedom: Ethereum staking

Instadapp profit aggregator ambassador and DeFi analyst Ignas pointed out in his article that he believes staking Ether provides the best risk-return ratio for achieving financial freedom. The Total Value Locked (TVL) of the derivative LSD alone is close to surpassing all decentralized exchanges. Even in a bear market, Ether can achieve deflation and staking rewards are not low. He is very optimistic about the development of Ether.

Thoughts on Ethereum Staking

Ignas mentioned that this article discusses his views on financial freedom through Ethereum staking, highlighting the current situation and future prospects of ETH staking:

  • Ethereum leads the market

  • Offers the highest staking rewards

  • Ethereum drives trends

  • Acts as a catalyst for the future

He listed several reasons why he is optimistic about Ethereum:

Ethereum Achieves Deflation Even in a Bear Market

He believes that Ethereum has the best token economics in the crypto space. Since transitioning to PoS last year, if assuming it remained on the PoW mechanism, the total value of ETH issued from the introduction of EIP-1559 until now would amount to $4.7 billion.

This means that the market value of newly issued inflationary ETH alone surpasses the total market value of Uniswap's UNI at $4 billion.

However, the ETH issued post EIP-1559 has not shown inflation but deflation, and this has occurred even during a bear market.

PoW has issued 2,580,160 more ETH compared to PoS

Ethereum as the Premier Staking Asset

Ignas pointed out a few key points:

  • ETH has a minimum staking rate of 14.8% and a competitive APR of about 4.5%

  • A low staking rate indicates more ETH available for staking in the future

  • Other staking coins are more centralized, with tokens needing to be distributed to early investors, insiders, and teams in the future

Decentralization of Ethereum Staking

He mentioned that with the upgrade of Shapella in Shanghai, users have started unlocking, and exchanges like Kraken and Coinbase have lost a significant stake in the staking market:

Analysis of Ethereum Staking Options

I. Liquidity Staking Derivatives

Ignas believes this is the best way to earn returns.

He would choose to stake stETH, rETH, and lend stablecoins for daily needs and debts.

With an average annual return of 4-5%.

II. Staking Ethereum with Rocket Pool

By running nodes through Rocket Pool, one can earn a 7.01% APR + RPL token rewards, suitable for retail individuals seeking low-risk node operations.

III. Leveraged, Liquidity Mining, Yield Aggregator

For example, the yield aggregator Instadapp Lite offers an 8.5% APY.

IV. New Staking Protocols

Ignas mentioned new-generation staking protocols like Eigenlayer and predicts more similar protocols will emerge in the future.

In situations of increased risk, users may earn over 50% APY with such protocols, but he advises:

If optimistic about a protocol, it's better to invest in the protocol's token rather than putting the best chance for financial freedom, "ETH," at risk through staking.

V. Small-Scale Ethereum Staking

The Distributed Validator Technology (DVT) is evolving, allowing users to operate nodes without holding 32 ETH. Through squad staking, DVT enables teams to stake varying amounts of ETH together.

Related protocols:

Regarding Ethereum staking, returns may vary based on factors like capital size and staking duration. Readers can refer to previous reports for evaluation:

Staking ETH is the Way to Go! Independent Staking vs. Liquidity Staking Derivatives LSD, which option yields better returns under different conditions?

Ethereum Staking to Surpass "DEX"

In the diagram below, there are 809 decentralized exchange protocols, while liquidity staking derivatives (LSD) only have 83. However, the TVL of the latter is close to $17 billion, almost matching the former's $17 billion.

Ignas pointed out that LSD protocol market value surpasses lending platforms and cross-chain bridges and is poised for continued growth.

Ethereum Staking is the Best Option for Financial Freedom

Ignas emphasized that even in a sluggish on-chain bear market, Ethereum staking can yield 5-9% APY. Once the bull market arrives and gas usage surges, Ethereum's staking returns and attractiveness will significantly increase, thereby driving up the price.

He provided some recommendations:

  1. Get a good night's sleep

  2. Maximize Ethereum returns

  3. Avoid chasing high returns and protect Ethereum from hacker attacks

  4. Protect Ethereum by using only blue-chip DeFi protocols and top centralized exchanges

Ignas concluded with a point for discussion: users with less than $10,000 in funds are better off staking through centralized exchanges or not staking at all, as on-chain fees may lead to a sudden drop in returns.

As for the favored LSD and DVT protocol tokens, he hinted at future analytical articles to be released.