Just 10% Deposit to Stake on Ethereum 2.0 – Trustnodes

Just 10% Deposit to Stake on Ethereum 2.0


Ethereum 2.0 staking minimum deposits, Nov 2020

Just above 10% of the required minimum amount has been deposited to stake on ethereum 2.0 as of writing.

Some 58,529 eth, worth $27 million, has been deposited out of a required 524,288 eth or about $240 million at the current price.

That’s some eight days after the deposit contract officially launched, with just about a week and a half left to go until the earliest time the eth 2.0 genesis block can go live on December 1st.

Devs have entered a requirement for the minimum amount to be met seven days before the genesis block automatically goes live, meaning the earliest that the minimum amount can meaningfully be met is 24th of November.

If it goes at this rate, by then there would probably be just 150,000 eth, far less than the 500,000 required.

The contract then is rolling, with just the minimum eth amount required for the genesis block to launch seven days after.

At this rate, that would take months, with prospective stakers clearly not in a hurry to send their eth.

There’s a few likely reasons for that. Staking providers like Coinbase or Bitcoin Suisse are unlikely to offer the service before phase 0 of ethereum 2.0 runs in a stable manner for at least some weeks.

Meaning prospective stakers currently need to know some basic coding to be able to run the command line as well as their own eth1 and eth2 nodes.

The inherent uncertainty on how the launch will go may also be keeping prospective stakers out as like service providers they too might want to see the network stably running first.

However, ethereum’s co-founder Vitalik Buterin, says: “Penalties for the early months of ETH2 have been reduced to 1/3 to 1/4 of their Medalla levels. And if 524,288 ETH participate, rewards are ~25% APR.

So in fact even if you somehow get slashed ~3 weeks after you join, staking would still probably be net-profitable.”

Meaning even if there is initially a case of non-finality, during which the network effectively stops running while penalizing stakers, the penalties would be way smaller initially to counter the presumably higher risk of initial non-finality.

The greatest risk for stakers is obviously the lockup period. Calculations here are very complex because there are many unknowns, starting with just how long the lockup period will be.

At this point, the best one can do is estimate, with ours being at least two years and even then, optimistically speaking.

That’s because phase one needs to go out first, and that’s storage sharding. That probably won’t go out next year because you need to finalize the spec for phase one, code it up, audit it all, testrun it publicly, and then finally upgrade.

After that is the merger. That’s the launch of full on Proof of Stake (PoS) by changing the RPC call from eth1’s miners to eth2’s stakers.

That’s a big event because it slashes inflation to just 0.22% a year from a current 4% a year, but at the same time it releases all these staking eth which finally can move as normal like current eth.

Until this merger, this staking eth can’t be transferred, can’t be traded on exchanges, and basically can’t do anything but watch the PoW blocks.

So if one wants to stake they also need to be sure they are happy to hold their eth for at least two years, but potentially three depending on how developments unfold.

During those two years they can’t participate in price setting. In addition, although initial stakers may receive 25% a year if there is just the minimum of them at 500,000 eth, that return reduces significantly if say another 500,000 eth is deposited, or another one million, etc.

Once you deposit, you have no say on what then happens as you can’t take out your eth because the returns are now suddenly too low because a lot of eth has been deposited as there is only one way initially.

So the decision of whether to stake or otherwise should be made very carefully and in a very considerate manner of the many factors that may come into play over two years.

Hence it’s perhaps not that surprising that only about 10% of the minimum has currently been met considering stakers are making fairly big decisions that span years with substantial sums of actual money.

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