𝔼𝕋ℍ 𝕊𝕥𝕒𝕜𝕚𝕟𝕘
I have now "staked" Ethereum on Binance and wanted to share my thoughts on this.
𝐊𝐮𝐫𝐳𝐞𝐬 𝐈𝐧𝐭𝐫𝐨 𝐳𝐮 𝐄𝐓𝐇 𝐒𝐭𝐚𝐤𝐢𝐧𝐠
To be able to stak on ETH independently you need at least 32 ETH plus hardware for the validator. Until the full upgrade to ETH 2.0, staked ETH cannot be "unstaked". That means until the full rollout of the new version, the ETH are firmly bound. When this happens nobody knows. If you want to stake there is a kind of queue, i.e. on chain new stakes are not immediately provided with rewards, but only from activation. The % of rewards decreases over time the more ETH are staked.
𝐋𝐢𝐪𝐮𝐢𝐝𝐞𝐬 𝐄𝐓𝐇 𝐒𝐭𝐚𝐤𝐢𝐧𝐠
The ETH that are given into the stakingcontract cannot be extracted. However, there are solutions that allow to keep the value liquid. For this purpose, 1:1 tokens are usually generated for each staked ETH. These generated tokens are freely tradable. The exchange value of the tokens is usually below the 1:1 ratio. So you pay a discount when you exchange tokens of the staked ETH for free ETH. Generally, all these systems have the risk that there is no liquidity to exchange one's token. If there is no one who wants to exchange their free ETH for the bound form, then no exit is possible.
An own validator has the highest profitability. Since an own validator or a validators as a service is not an option for me, I will not go into this further. Furthermore the slashing risk should be mentioned, in case of misbehavior the stake can be devalued up to 100%.
𝐒𝐭𝐚𝐤𝐢𝐧𝐠 𝐏𝐨𝐨𝐥𝐬
Decentralized pools offer the option of non custodial or with distributed custody and liquid staking. Rocket Pool is just launched a month ago me still too new but offers non custodial and liquid. I will talk hereafter about Lido, which is the largest pool with Anbstand. Lido works with distributed custody, which means there are 11 key holders via a multisig. [0] You get rewards from the moment you contribute your ETH and you don't have to be "in queue". Computationally, this is made possible by a lower Reward than there is on Chain. Since Lido runs on the blockchain, all actions cost fees. This makes staken with smaller sums less interesting. Additional risks to the ETH / ETH2 inherent risks are the smartcontract and the DAO. If a bug exists or the multisig keys are compromised, the funds are at risk. The market for the staking token stETH is currently very liquid. The liquidity pool on Curve holds $5 billion in liquidity and is actively promoted by Lido. Lido takes a 10% fee, this is used to run the validators, as well as an insurance fund in case of slashing, as well as to incentivize the Curve liquidity pool. [1,2]
𝐄𝐱𝐜𝐡𝐚𝐧𝐠𝐞 𝐒𝐭𝐚𝐤𝐢𝐧𝐠
Coinbase, Kraken, and Binance offer staking for ETH. Coinbase does not offer liquid staking and was out immediately for me. Since the market for staked ETH on Binance is more liquid than on Kraken, Binance has the edge over Kraken for me. Likewise, the trading volumes for ETH on Binance are larger and the risk discount on Binance is higher. Therefore, I will only discuss Binance in the following.
Binance pays out the on chain rewards without deductions and takes on the risks and costs of running the validators. Just as with Lido, you get payouts without time in the queue, achieved in the same way. The biggest risk here is of course Binance and the fact that you are not the master of the keys. The advantage is that there are no costs and you can achieve a difference between ETH and the Staking Token. Currently, the discount moves at 9-10%. I.e. after the exchange into the Staking Token you have 9-10% more and get accordingly more rewards. For comparison, the discount on Lido's stETH has been very close to zero for a long time.
𝐒𝐭𝐞𝐮𝐞𝐫𝐧
are unfortunately incurred and some things are certainly still unclear here. If one swaps into a Stakingtoken this should apply like any other crypto to crypto trade. So from 1 year tax free (DE). How it looks when the token is later forcibly converted when the network update is through no idea. The income from the staking falls into the 256€ exemption limit, if exhausted personal tax rate. Regarding the holding extension of the Stake, the BMF is currently of the opinion that an extension to 10 years applies. However, this is "only" an opinion and not confirmed by courts or a specification of the legislator, so it could change, but it does not have to. [3,4]
𝐌𝐞𝐢𝐧 𝐅𝐚𝐳𝐢𝐭
Since the ETH I've now exchanged for BETH on Binance have been sitting around for years they're already mentally depreciated. In the meantime the stuff was at -80 or -90% I don't need them tomorrow and also not in one or two years. An alternative would be to leave the ETH lying around without them generating anything for me. Alternative to staking would be Lending. But the APY for Lending is only interesting on centralized platforms. Aave, dydx or compound do not pay much for ETH lending.
Why Binance instead of Lido? If the upgrade comes at some point and the subsequent conversion is 1:1 to ETH2.0 I got just under 10% extra on this ETH, plus the rewards for staking. If the upgrade doesn't come or ETH otherwise craps out, then the ETH are probably worthless either way. If Binance crashes, this is just as unfavorable for crypto in the medium term, as the platform is still the largest, but would of course be the worst case. The 10% is the risk compensation for that. Currently, Lido manages over 1.5 million clocked ETH, which is more than Coinbase, Kraken or Binance. [5] The market obviously trusts Lido more than the centralized platforms. Therefore, the discount on Lido is correspondingly almost non-existent. I am young and need the risk.
No tax or investment advice.
[0] https://blog.lido.fi/lido-withdrawal-key-ceremony/
[1] https://blog.lido.fi/concerning-steth-liquidity/
[2] https://lido.fi/static/Lido:Ethereum-Liquid-Staking.pdf
[3] https://cryptotax.io/verlaengerung-der-haltefrist-auf-10-jahre/
[5] https://pro.nansen.ai/eth2-deposit-contract
