Validator node as a service – the best solution to Ethereum staking?

As Ethereum continues its move away from Proof of Work to Proof of Stake, wise investors should understand the opportunities presented by Ethereum Staking Rewards – and how best to access them.

Ethereum’s move to Proof of Stake has made quite a stir across blockchain, finance, and other conventional industries’ worlds. At the moment the news that hasn’t made the headlines is that investment funds, private companies, family offices, and individual investors have already begun locking their fiat and ETH in a race for Ethereum staking rewards – and this is only the beginning!

As noted by Bank of America, this trend is only set to develop further, turning Ethereum into the primary staking protocol on the blockchain. And whilst other DeFi projects continue to show traces of incomplete security in code, Ethereum continues to plough further towards a very bright future.

As with all new tech and blockchain, Ethereum staking is surrounded by many unknowns for the audiences that are just coming to grips with it. Therefore, we set out on a mission to get you fully updated on the following:

• How does Ethereum staking work?
• Best ways to stake Ethereum.
• What are the Ethereum staking rewards?
• What will happen to ETH price once locked funds become withdrawable?
• How to integrate Ethereum staking on an enterprise level.

Diving into Ethereum staking

Whether you already know the benefits of Ethereum staking or are just starting to become acquainted with it, understanding what this movement brings to the off-blockchain economy is still critical. According to reports, ETH proof of stake already attracts a great many individuals and enterprise investors. This means that Ethereum’s integration into the conventional economies has already begun and with every new staking participant, the synergy becomes even further intertwined.

“Enterprise entities start to realise that Ethereum staking offers returns that are often unmatched on conventional fixed income markets and this is when they come to us.” Jaydeep Korde, CEO of Launchnodes

Is it a bad thing? Definitely not, because thanks to Ethereum staking, companies get access to additional passive income that can then be used to sustain their main activities. Investment funds and non-profits use Ethereum staking rewards for their investments, private companies launch pension funds for employees, whilst others are simply looking for additional income streams.

How does Ethereum staking work?

The shift from proof-of-work to proof-of-stake assumes that in a short matter of time, the Ethereum network will completely move away from physical mining in order to approve and process transactions, pulling all operations online. So miners become online miners, and everyone can now participate in Ethereum decentralization without spending money on equipment that loses its value by the minute, let alone its upkeep hurdles.

Staking requires its participants to hold 32ETH in a wallet connected to a validator node that acts as an online version of a physical miner. It executes the same operations and 32ETH are held as a guarantee that the network won’t be cheated and transactions’ approval tinkered with.

What are the best ways to stake ETH?

Although ETH staking can hardly be called a long-existing affair, it is already surrounded by a wide variety of services that help people to stake 32ETH or less. As with all other industries, there are advantages and disadvantages to most of these third party ETH staking providers and this is where validator node as a service takes a clear win. This is further applicable if you are serious about the safety of your investment and the returns it generates.

Non-custodial ETH staking

Industry pros consider it to be the safest and most profitable way to stake ETH. Therefore, if you find yourself asking how to stake 32ETH, then this is your best option. Safety comes due to the fact that your ETH remains in your wallet, be it Metamask or any other web3 storage. Those who already know the market have surely heard about Launchnodes. Those who are new to it, should check this company out.

Based in London, Launchnodes is known as the leader in non-custodial, enterprise-grade Ethereum staking service provision on AWS. Yes, your node will be set up on Amazon Web Services and will always run the latest version of the Prysmatic Client. Apart from validator nodes as a service, Launchnodes also offer Beacon nodes as a service, standalone Beacon nodes set up and a Staking Pool solution for groups of people who want to collectively stake 32ETH using a single node.

Needless to say that among institutional clients, a non-custodial Ethereum staking path is the only acceptable way forward. Why? Simply because you will be hard-pressed to find an investment fund whose internal code of conduct allows transfers of clients’ funds to a separate third party. This is already widely documented in various articles and serves as additional proof that non-custodial validator nodes happen to be the most professional solution on the Ethereum staking market.

Last but not least, with a service provider like Launchnodes and AWS, you receive unmatched flexibility in terms of node placement geography and the staking architecture itself. This comes in handy when you are looking to run more than one node and need just the right latency characteristics.

Custodial ETH staking and pools

The second type of ETH staking services is, in most cases, applicable to investors willing to stake less than 32ETH. It is only reasonable that staking less than 32ETH cannot be done via a designated node and hence, this is where the staking pools act as the only feasible solution. These service providers carry a greater grade of risk and lack of overall control, since clients are required to transfer their ETH to the service providers, without having a clear understanding of what happens to their staked crypto.

Staking with a well-known exchange means that, at least, it won’t shut down in the event of a hack attempt, but the price you pay for this is a very high monthly commission. Exchanges like Coinbase would typically charge from 25% and this will hardly ever be a fixed number.

The final category of staking services is the semi-custodians. These are services that make it look as if they are fully non-custodial but at some point during the registration you still need to share your access keys. Some other providers opt for a software that presumably makes staking onboarding more user-friendly. Of course, there is a good share of truth to this, but just like with exchanges, you simply tie yourself to another point of dependency.

ETH price after staked amounts get unlocked

It is natural to assume that many current participants of the proof-of-stake Ethereum 2.0 would be looking to withdraw their ETH as soon as it becomes possible. This may perhaps be true, but let’s not forget that most users are part of Ethereum staking for continuous passive income and do not appreciate the in and out strategy. Undeniably, there will be a good share of participants who would want to withdraw their holdings, but this would effectively cause an increase in the APY. In turn, an increased APY is set to attract the next wave of network participants and it is this that offsets the possible price fluctuations. Therefore, unlocking ETH is not critical and should be seen as a benefit to the overall economy of Ethereum 2.0.

Why should you stake ETH?

By no means should this be considered as investment advice, but let’s look around and see why ETH staking is about to become integral to our everyday lives. Nonprofits are getting into crypto and the only safe way to get passive returns out of it is by staking Ethereum. Recent Compound vulnerability serves as proof to it. Institutions are already avid participants. Private companies are also chasing up on the trend. Is Ethereum staking worth it? Certainly, but only if you do it right and in a non-custodial manner.

The interest that institutions show towards Ethereum staking can easily be explained. Fixed income markets simply do not offer the same level of returns they used to and as per all possible forecasts, the direction this is all headed is strictly South.

The best way to stake Ethereum 2.0

Over the course of this article, we have tried to explain why Ethereum staking is here to not only stay, but gain momentum. At the same time, the plethora of services that can aid you in becoming an ETH stakeholder pesters with variety, but as you already know, validator node as a service is the only right solution if you intend to stake 32ETH or more. Choose your service provider wisely and you will never regret it. After all, companies like Launchnodes become the leaders in Ethereum staking on AWS for a reason, and that reason is consistency in performance, safety and flexibility in staking architecture. Opposingly, if you have less than 32ETH, then it is best to opt for a well-established pool, with a transparent structure of its staking.

Editorial Note: This is a sponsored article. Opinions expressed are solely those of the sponsor and readers should conduct their own due diligence before taking any action based on information presented in this article.