Beginners' Guide to Stader and ETHx
Stader is a multi-chain staking protocol with ETHx as its Ethereum liquid staking derivative.
What is Stader?
Stader is a multi-chain liquid staking protocol with more than $100m in Total Value Locked (TVL). It will soon launch a new Ethereum liquid staking derivative (LSD) token called ETHx.
In today's centralised LSD market, where the top 3 entities control the majority of staked ETH, and the top LSD protocol has 90% market share and works exclusively with permissioned node operators, permissionless LSDs have yet to achieve the scale they need to be useful for DeFi acceptance.
What is ETHx?
ETHx will be Stader's LSD with a unique value proposition for both users and node operators. Its vision on Ethereum is to deliver a liquid staking product that can find the right balance of being user focused, scalable and decentralized.
It will employ a multi-pool architecture with a hybrid model of permissioned and permissionless operators. Permissionless operators will have a bonding requirement while whitelisted, permissioned players will have lower bonding requirement. Distributed Validator Technology (DVT) operators could also be supported in future.
The multi-pool design allows permissionless node operators to stake with ~85% lower capital while earning higher yields compared to solo-staking.
The ETHx design incorporates 13 key modules, 12 of which have been developed in-house by Stader and 1 is forked from RPL’s open sourced smart node code.
Stake with only 4 ETH bond for permissionless node operators
A permissionless node operator can begin running nodes for Stader by depositing just 4 ETH that acts as a collateral against poor performance.
The bond from the node operator is combined with funds from users that stake through Stader’s ETHx, to make a total deposit of 32 ETH to register and run a validator.
Unlike most other LSDs, the low 4 ETH bonding requirement is far more capital efficient to run a node. It believes that this number meaningfully lowers capital required to participate and improves capital efficiency while being safe from MEV theft, i.e. attempting to withhold or conceal MEV rewards from ETHx holders.
It also covers other risks such as prolonged inactivity leak, poor operator performance and being slashed.
Stader charges a 10% commission for its service, which would be shared equally between node operators and Stader.
Stader's ETHx is another decentralised LSD attempt to grab a pie of the growing staking market for Ethereum, with only ~15% of Ethereum staked.
Stader's goal of lowering the barriers to staking Ethereum so that anyone can run a node with a lower bonding requirement of 4 ETH, might allow it to effectively battle the threat of centralisation of Ethereum staking.
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