We're excited to announce that one of our most requested features - ETH Staking - is now available. Start earning staking rewards, in a tap, in Argent.
You can find it under the 'Investment' tab in your wallet. Read on to learn all about liquid staking with Lido in Argent:
What is Staking?
Since its inception, Ethereum has used a 'proof-of-work' (PoW) model to secure the blockchain. With proof-of-work, complex math problems requiring a lot of processing power are solved by miners to complete transactions and earn rewards
However, PoW has some drawbacks, including environmental impact and lower security compared to proof-of-stake (see Vitalik's explanation for why, here).
In comparison, the new proof-of-stake (PoS) consensus model uses ETH as a collateral to secure the network. PoS uses validators chosen at random to create and confirm blocks. A validator's staked ETH incentivises honest behaviour. The full roll-out of ETH 2.0 is expected to take place over the coming 2-3 years.
You can read about our UX Director, Graeme's adventure with setting up a validator for ETH 2 staking here.
Issues with running your own validator
There are a few issues with staking ETH using your own validator, that make this approach not suitable for everyone:
1. ETH can only be staked in multiples of 32
If you had, say, 3 ETH in your wallet, you would not be able to participate in staking. Similarly, if you had 40 ETH, you would only be able to stake 32 of them. This is a barrier to wider participation in staking.
2. Stakes are (initially) locked until later stages of the ETH 2.0 launch
Any ETH staked with a validator cannot be withdrawn until transactions are enabled in Phase 2 of Ethereum 2.0. Though we have already seen a huge amount of participation in ETH 2 staking, it's likely that more are interested, but not willing to commit until they have a way to withdraw.
3. Staked ETH is illiquid while locked for staking
Even after Phase 2 of Ethereum 2.0, you won't be able to trade or transfer any ETH actively being staked in a validator. This may put off users who wish to, for instance, use their staked ETH as collateral in DeFi.
The good news? Lido solves all of these problems.
What is Lido?
Lido Finance is a liquid staking protocol, first announced in October 2020. In December, Lido raised $2 million in fresh funding to support their mission of allowing users to earn ETH 2.0 staking rewards, without having to set-up and maintain a validator of their own.
At time of writing, there is currently over 18,800 ETH/$23m being staked in Lido's protocol.
Lido uses smart contracts which let you deposit as much, or as little ETH as you would like to stake. In return you receive a token - stETH (see below) - representing your stake. The ETH you deposit into the contract is shared amongst Lido Node operators. Lido Node operators run validators and are compensated by the Lido DAO using a portion of the 10% profit fees collected by the protocol.
The Lido DAO is a Decentralized Autonomous Organization (DAO) which oversees the operations of Lido. The Lido DAO keyholders include some of the biggest names in DeFi. You can read more about the withdrawal key generation process here.
Lido DAO governance is done through LDO, which is a governance token that was issued to founding members of the Lido DAO, as well as airdropped to those who staked or held stETH before December 28th 2020.
You can learn more about Lido DAO and the LDO token on Lido's blog, here.
What is stETH?
The stETH token is a tokenized version of staked ether. When a user sends ether into the Lido liquid staking smart contract, the user receives the corresponding amount of stETH tokens. The stETH token represents Lido user’s deposits and the corresponding staking rewards and slashing penalties.
You can trade stETH on Decentralized Exchanges (such as through our native Paraswap integration), transfer it, or use for DeFi. Rebaseable tokens are not fully supported for pooling by - for instance, Uniswap - which can lead to a negative impact on your stETH token balance.
We expect a number of DeFi applications for stETH to emerge in the coming weeks and months.
How to stake ETH in Argent, and receive stETH
It couldn't be easier to stake ETH with Lido in Argent:
- First, go to the 'Investment' tab
- Select 'Ethereum 2.0 Staking'
- Tap 'Lido Staked ETH'
- Tap 'Buy Investment'
- Enter the amount of ETH you would like to invest
- Tap 'Continue'
You'll then receive stETH tokens, representing your stake in Ethereum 2.0.
What are the returns?
The percentage return on staked ETH will depend on the total staked ETH in the network. APR decreases when the total amount of staked ETH is increased. Your stETH balance will update once per day to reflect any changes. Any earnings from staking will be reflected by a higher stETH balance.
Are there any fees?
The Lido system applies a 10% profit fee, which is distributed between node operators, the Lido DAO, and an insurance fund. More details are provided in the Lido Primer documentation. Argent does not take a fee for staking through Lido.
Can I withdraw my stETH once I've staked ETH?
Native withdrawals from Lido will be enabled after Phase 2 of the ETH 2.0 rollout. However you can always trade your stETH back into ETH from the 'Invest' tab. You will receive ETH from the Curve stETH-ETH pool, so you may receive a bit less ETH than your stETH. You can check the current rate on curve.fi.
Why should I use the investment tab to stake ETH, rather than buying stETH through a DEX?
Staking this way you'll always receive 1:1 stETH for your ETH deposit. The gas should also be lower this way, and you don't have to worry about slippage. What's more, by depositing directly you are supporting the Ethereum network by increasing the total amount of staked ETH.
What are the risks?
Lido have identified the following possible risks of using liquid staking protocols:
Other Risks include Eth 2.0 Technical and Adoption risk, DAO key management risk (addressed by using a multi-signature threshold scheme), Validator Slashing risk, and stETH price risk.
You can read more about this, along with the measures taken to address them, at Lido's FAQ page here.
You can download Argent for free on Android and iOS here.
We’ll be announcing more big developments in the near future. In the meantime, you can read about our one tap DeFi access here.