To Liquidity, and Beyond!

ether.fi Official

Published in

ether.fi

3 min readMar 17, 2023

We’re building non-custodial staking protocol that enables trustless node operation at scale.

ether.fi is a delegated staking protocol designed from first principles, with decentralization at its core.

Stakers keep custody of their keys and ETH
A liquid staking token that is composable with other DeFi protocols
Validators can run nodes without putting up any ETH in collateral
Trustless node operation allows for a services layer on which others can build on top of
Stakers and node operators get economic exposure to additional services built on staking infrastructure that boost rewards

NFTs are the Key

With ether.fi, stakers keep custody of their ETH and can withdraw it at any time. This is due to ether.fi’s unique groundbreaking architecture using a bonding NFT and a transferrable NFT representing staked ETH in the contract (Graphic 1).

For every 32 ETH staked via ether.fi’s protocol, a pair of NFTs are minted: one T-NFT, one B-NFT. Together they represent a single Ethereum validator. The T-NFT, or Transferrable NFT, represents a 30 ETH interest in the validator and will offer holders a significant interest in the validator’s net rewards. The B-NFT, or Bonded NFT, represents the remaining 2 ETH stake, and delivers a superior rewards, but is accompanied by additional duties and risks. The B-NFT holds the validator key — must monitor and exit the validator upon poor performance — and its 2 ETH functions as a deductible in the event of missed validation duties or slashing.

Trustless Node Marketplace

Every time 32 ETH are deposited into a contract to be staked, ether.fi runs an auction for node operators to bid to get the staking contract. This marketplace accomplishes two things:

Allows for a neutral node operator set.
Creates an additional revenue stream for the protocol, which it shares with stakers, boosting rewards.

Boosted Rewards

One thing that centralized node operators benefit from is additional revenue through products and services built on their staking infrastructure.

RPC endpoints
Dedicated nodes
Data APIs

ether.fi is innovating on the concept of how to build these revenue streams into a truly decentralized protocol.

All of this additional revenue with be shared with stakers and node operators creating an alignment of incentives between stakers, node operators and protocol.

The Ethereum ecosystem needs something that aligns these three incentives and ether.fi is answering the call.

How We’re Going to Get There

The protocol’s roadmap is split into three phases, with each phase of completion targeted towards making the protocol more decentralized.

Phase 1: Deleg8

Mainnet goes live on our desktop app and users begin delegating ETH to the ether.fi staking contract, earning and withdrawing staking rewards. Stakers will own their validator keys and mint the T- and B- NFTs to represent the ownership of their staked ETH. An auction mechanism will go live for node operators to bid on nodes. ether.fi launched with a trusted group of initial node operators including Finoa, Kiln, DSRV, Chainnodes, Obol, Allnodes and Cosmostation. As the protocol launches into phases 2 and 3, this set of partners will expand persmissionlessly.

Timeline: April 2023

Phase 2: Pool Fiesta

The liquid staking pool goes live and users can stake their ETH at any increment, and mint our liquid staking derivative token (eETH) in return. eETH will rebase in tandem with the amount of staking rewards. The liquidity pool will enable trades of ETH, eETH and T-NFTs. This will be the simplest way for users to earn ETH staking rewards at an incremental level. A permissionless Oracle employing the beacon state root will be introduced to power the ether.fi ecosystem including the liquidity pool. ether.fi will launch it’s protocol treasury management contract.

Timeline: Q2 — Q3 2023

Phase 3: Boost

ether.fi launches its node operator auction protocol and its services marketplace using ether.fi’s decentralized and distributed networks, creating additional revenue for the protocol, stakers and node operators. We will release the ether.fi node client. We will also integrate distributed validator technology. At this stage, the protocol will achieve network effects through alignment of goals between staker, node operator and protocol. This is a speculative phase for the protocol, and many of the technical decisions have yet to be made. Integration with the distributed key generation and distributed validator technics will come.

Timeline: Q1 — Q2 2024

Technical Documentation: