WEEKLY CRYPTO BYTES #2
How to Stake in Rocket Pool?
Staking is in crisis in the US after SEC started cracking down on retail staking on centralized exchanges in early 2023.
Staking in crypto is a process by which individuals lock up a portion of their cryptocurrency to support the security and operation of a blockchain network that uses the Proof of Stake Consensus mechanism.
Why is SEC cracking down on Staking? SEC is treating Staking in crypto the same as lending, and all these centralized exchanges offering Staking as a Service will fall under the same regulatory framework as securities involved in Stocks and Bonds. The crypto exchange Kraken agreed to pay $30 million to settle allegations that it broke the agency’s rules by offering a service that allowed investors to earn rewards by “staking” their coins.
SEC’s actions have benefited decentralized Staking platforms in DeFi, like Lido, in getting more customers who have quit Staking on centralized exchanges. Even though there are uncertainties with Staking in the US, the DeFi protocols run by smart contracts are hard to target with the regulatory framework of the SEC.
But Ethereum Staking is in a deeper inherent crisis that can make it more centralized and vulnerable to blockchain networks’ 51% attack vector.
Lido has become the market leader in Ethereum Staking with 7.18 million staked ETH, or 36% of the total 19.6 million staked.
The DAO crypto media platform Bankless has reported that:
“Lido is nearing the first of three thresholds at which an attacker more easily manipulates Ethereum.”
Ethereum advocates are now calling all Ethereuns worldwide to spread out their ETH staking into other decentralized platforms to reduce the reliance on the Lido platform alone. That’s where the RocketPool decentralized staking platform comes into the picture.
Rocket Pool is an Ethereum 2.0 staking pool. The protocol seeks to lower both the capital and hardware requirements for staking on ETH 2.0, adding to the decentralization and security of Ethereum. To achieve this, Rocket Pool allows users to stake trustlessly towards a network of node operators. ~ Messari
Rocket Pool which started in 2016, is an ETH staking protocol that is community-owned, decentralized, and trustless and enables staking in ETH 2.0 with as little as 0.01 ETH. You can stake in Rocket Pool in two ways — people who wish to participate in tokenized liquid staking using rETH and people who wish to stake ETH and run a node. Here I will show the steps to get started with tokenized liquid staking.
First, you must launch the Rocketpool page and click the Stake button. This will prompt you to connect your wallet. I have used MetaMask here.
Once you have connected your wallet, you can enter the amount of ETH you like to stake and receive the liquid staked rETH token in return.
Liquid staking tokens unlock the inherent value that staked tokens hold and enable them to be traded and used as collateral in DeFi protocols.
You must confirm the transaction on your MetaMask wallet to complete the transaction.
Congrats! You have staked with the ETH 2 Network and are now part of a better-decentralized future of the Ethereum Network.
