The Staking Police - The Daily Gwei #291
Ensuring that users remain safe in the lands of the Beacon Chain.
Ethereum’s staking ecosystem is diverse as stakers consist of individuals, staking service providers (distributed ones like Lido or otherwise), decentralized staking protocols (such as Rocket Pool), centralized exchanges (Coinbase, Kraken) and other third party services. Due to the nature of how Ethereum PoS works, we as a community need to keep these numerous providers in check and make sure that users are aware of those that have had “mishaps” in the past.
In the tweet above you’ll see that TheSquanch has put together a resource that tracks “staking pool mishaps” by showing if a staking pool/service has been slashed, provided poor service (such as going offline constantly), lost funds or even stolen them. I think this is a critical resource that is sorely needed because we want users to be able to know which staking providers they can trust to keep their funds secure. Of course, I always encourage people to stake on their own, but unless they have 32 ETH then that’s out of the question until decentralized solutions such as Rocket Pool go live. Even then, many people still prefer to just delegate their ETH staking activities to centralized providers for a number of reasons (which I’ve outlined in a previous piece here).
I think that the fact that users have so many different providers to choose from when it comes to staking their ETH is very healthy for the ecosystem. It’d be pretty sad if just 1 or 2 centralized exchanges ended up becoming over 50% of the network just because they were the only options. Of course, it’d also pose a serious security risk to the network and would degrade Ethereum’s decentralization properties. In saying that, the various client teams have done a stellar job in making it really easy for people to stake on their own though the 32 ETH minimum is still a massive barrier. I mean, that’s worth over $60,000 at today’s prices which is just under the average yearly wage in the U.S - not everyone was lucky enough to scoop up their 32 ETH for less than $5000 during the last bear market!
The resource that TheSquanch put together could also be replicated for something like DeFi where it would track which projects were rug pulled, which ones were exploited (and how they rectified it), which ones have audits done, how long a project has been live without being exploited and more. This would allow users to make much more informed decisions about where they put their funds and also help them to avoid losing those funds in an irrecoverable way.
At the end of the day, user safety is of critical importance and anything that we can do as an ecosystem to improve it is a net benefit. It also doesn’t just apply to staking and DeFi but also to things like wallets (which ones are trustworthy) and encouraging people to run their own infrastructure if they can (such as a full node). I think over time these resources will improve but for now it’s still the wild west in the Ethereum ecosystem.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.