3 Reasons Why Solo Home Staking is the Gold Standard for Ethereum
Staking Ethereum is a fantastic way to earn passive income while also getting involved in the Web3 movement. According to the official Ethereum.org documentation, the best way to start staking is to stake on your own from home. Here are the three reasons why solo home staking is the gold standard when it comes to staking ETH.
1. Solo staking means keeping all of your ETH earnings
In the Ethereum ecosystem, validators are rewarded for helping the network stay decentralized in the form of financial incentives known as staking rewards. When you are the one running your own ETH node, you get to keep 100% of the rewards you earn.
As echoed by the Ethereum.org documentation, staking on your own lets you earn ETH-denominated rewards directly from the protocol when your validator is online. Best of all, staking on your own enables you to do this without any middlemen taking a cut of your earnings.
If we compare this to other methods of staking, it becomes immediately clear why solo home staking is the gold standard. For example, another very popular method of staking is to do so through a centralized exchange.
When you stake on a centralized exchange, the exchange itself gets to keep a portion of your rewards as a service fee. Major cryptocurrency exchanges like Kraken and Coinbase, for instance, charge as much as 15% of the staking rewards that you earn as fees.
This means that, if you were to stake the current minimum amount of 32 ETH through an exchange like Kraken or Coinbase and were earning $2,241 USD per year on your stake (based on estimates from StakingCalculator), you would lose out on $336 USD. Over five years, you would lose out on $1,680 USD.
Using other exchanges could mean seeing an even larger percentage of your earnings be taken from you. If you were to stake a larger amount for a larger period of time, the amount of money that you would be leaving on the table by using an exchange would be even more severe.
With independent at-home staking, you never have to worry about anyone else enjoying the spoils of your contributions to the Ethereum network. Instead, you can be fairly rewarded by the network, not promote centralized entities, and walk away with a larger sum of money.
2. Solo stakers help the network stay decentralized
Staking is not just about making a passive profit. Rather, staking is also about helping decentralized networks like Ethereum stay alive without the need for centralized entities like banks and other financial middlemen.
When the cryptocurrency movement first started, it was created with the intention of rebalancing power in our society away from the financial entities. Cryptocurrencies allow us to conduct financial activities on an entirely peer-to-peer basis that gives power to users instead of businesses and platforms.
But in order for this power to stay in the hands of users themselves, it is crucial that no single user or group has the power to influence the broader network. This means that the healthiest way to maintain decentralization is for different individuals around the world to all run their own validators.
Concerningly, an article last year from Cointelegraph found that 64% of staked ETH was controlled by 5 entities at the time of their reporting. While this is not a cause for panic, it does reinforce the importance of solo staking.
Without enough solo stakers, there can be increased risks of a 51% attack, in which a single entity uses their ruling stake to make harmful changes to the network.
In addition, the Ethereum network is made up of execution and consensus clients. According to Ethereum.org, if a single execution client makes up more than 33% of the network, issues in the client could make the wider Ethereum network temporarily go offline. If a client with a 66% share encountered a significant bug, it could also cause the network chain to incorrectly split and unjustly penalize stakers.
Currently, the execution client Geth is used by more than 66% of the network. In addition, two consensus clients known as Prysm and Lighthouse are each used by more than 33% of the network. To counter this and increase client diversity, users who stake from home can choose to use other execution clients such as Nethermind, Besu, and Erigon. In addition, they can also use conesus clients such as Nimbus, Teku, and Lodestar.
In the fight to keep networks healthy and decentralized, solo stakers are the gold standard.
3. Solo staking means staying secure
One of the largest issues with trusting a centralized exchange as a way to stake a project is that it means letting someone else control your funds. As we have covered in the past, if you are not the only person who has access to your private key, your funds are not safe.
Experts often use the quote “not your keys, not your coins” as a way to remind people why it is so important to be in control of your own holdings. Trusting an exchange is essentially like letting someone else hold your wallet in the real world. While entities can seem trustworthy, there is no telling when someone may betray your trust and steal your funds.
Relying on an exchange also means trusting that their security is sufficient to keep your funds safe. Unfortunately, this is often not the case. 2022 was the largest year ever for crypto hacking. According to research conducted by Chainanalysis, $3.8 billion USD worth of crypto was stolen.
Two of the most notable examples last year were the breaches that impacted FTX and Binance. In the case of FTX, more than $600 million USD worth of crypto was stolen. Users woke up and their previous holdings had turned into balances of $0 overnight, despite FTX being a widely recognized major centralized exchange.
In the case of the Binance hack, the massively popular exchange was targeted by hackers in October 2022. They managed to make off with $570 million dollars worth of crypto.
It is entirely possible to stay completely safe while storing crypto and staking exciting projects. But to do so, you will have to be your own bank. Solo staking is the gold standard as it allows you to protect your own funds so that you do not become yet another victim of a major exchange breach.
Solo staking is easier than ever before, thanks to AVADO
Solo staking has traditionally been too difficult for most people to access. The process requires a lengthy and difficult installation process that is usually only manageable for people who are incredibly patient and have a lot of experience with technology.
Fortunately, the arrival of the AVADO plug-and-play blockchain device range means that anyone can start solo staking from home right now. Our devices allow you to enjoy all three major benefits that make solo staking the gold standard, without having to deal with all of the hassle that has long prevented ordinary people from getting involved. These devices also support client diversity.
To find out more about how AVADO allows users to keep all of their earnings, helps the Ethereum network stay decentralized, and lets you stay secure, visit our website today.
