SOTS #23: Red, Yellow, Green for solo staking, pools, exchanges

Transcript

hey everyone superfizz here um very excited about today's state of the state today is december 6th i never get the date right uh december 6th or 7th 2020 it's a monday um i haven't i'm just i'm wildly excited about today's state of the state because i finally get it i get uh where we're headed since launch since the launch of the beacon chain i didn't know how to best guide users i have have had a gut feeling that i'm not comfortable with exchange based staking i've had a gut feeling that i'm not really comfortable with staking pools but i haven't really known how to articulate that

today using the rule of thirds i hope i have these are my uh you know people put add-ons on the screen i don't know how to use computers yet um i'm not into youtube yet i don't know i'm not a video editor i'm getting there at any rate i'd like to talk to you about where we are in the big scheme of staking um this is something you can share with your friends i hope you encourage your friends to take a step back and look at the big picture before they yolo in and now i can articulately explain that rather than just sharing my gut feeling and so this is my uh cat saying take your hand off the

keyboard in my mind it was so much cooler like it was a great idea but now that i'm holding it up i'm kind of like what the hell am i doing bear with me so um i want to talk about three stages of staking and the stage we're in right now is the green stage that is if you are a solo staker it is time for you to stake i encourage you to carefully set up a stake after you've participated in a test net i encourage you to only stake on one machine we there's a user on reddit last night who is not an english speaker who learned staking through pictures

after having done pooled mining for about two years to raise 32 ether and because he was learning through pictures and following prompts he he created a redundant system and was slashed i honestly feel really bad for him um but he's gonna be okay he'll be put in the exit queue and in two years he'll be able to get most of his ether back but if you're a solo staker now is the time to jump in it is a great time if you have 64 eth then you can stake half of that keep half of it in your pocket and everything is great if you don't have that

then i need you to wait just wait i'm going to explain it to you but it i promise you it's in your best interest if you're not ready to solo steak to just wait i'm gonna tell you why so green is solo um that's great do it if you've got it now we're gonna move to yellow and so the thing about yellow it doesn't actually exist yellow is caution and so caution is for trustless and decentralized pooled staking let me break that down for you it's trustless because you are not trusting anyone else

to take care of your coins if they disappear a contract can return those keys or deliver them to you i'm sorry deliver those coins to you when the network when the two chains are merged so because it's trustless you're not depending on them to be around you're not depending on a company or anything it's going to be fine it's decentralized because the nodes are split up all over the world they're not housed in one warehouse if that warehouse goes down you're not going to lose anything and it's a pool because you can stake there with less than 32 ether now i'm done being ashamed of saying that i'm a fan of rocket pool because i'm a fan of

rocket pool rocket pool is promoting a trustless and decentralized pool staking solution now i hope there are others there needs to be competition to rocket pool but right now they are developing the product that will make a difference but they can't ship yet and so there's a great uh brief article by lakshman sankar that came out today he is an ethereum foundation researcher and he put the final pieces together for me because i had been reading some of this but you know between running the two-year-old and trying to maintain the community i don't learn as much as i'd like to but really what i finally understood is that there can be a protocol upgrade that

allows the withdrawal address of a validator to be determined at the beginning when you submit the deposit and the benefit of this is that smart contracts can then take control of that and ensure that as an individual staker you will get your coins back there's no need for a third party um that is what rocketpool has explained to us for several months that they're waiting for and it's why i'm very committed to sticking with them because so many times they have made choices that are in the best interest of the community rather than their own best interest does that mean that they will never have a

problem no i i can't say that they're that they're going to be perfect i cannot say that their contracts will not be exploited what i can say is that every action i've observed has been in the best interest of the community and so right now only trustless decentralized staking pools fall into the yellow category the caution you might participate in them and there aren't any and i can say that for certain because the protocol the ethereum protocol is not yet um is not yet enabled to allow those uh transactions to it to a specified address so any staking pool that you participate

in no matter what they tell you they are trusted that means you're giving them your funds and you hope that in two years they're going to be there to give your funds back um before i talk about my problems with that let me get into red red is centralized staking solutions primarily by exchanges let me be the very first to say that i like coinbase i'm a fan of brian armstrong i feel like he's an advocate for the industry coinbase provides great leadership and a service

but they're not a good place to stake and i do not say that to step on toes i say that for the health of the beacon chain for the health of the ethereum community above all coinbase binance they are businesses their goal is to make money and i don't fault them for that i hope they're very successful but as an end user you're not the beneficiary of that you are a product or a tool to get that they need your crypto deposits they need your transaction fees in order to make money they're not here to benefit you they're here to benefit their business and their shareholders and so

there's nothing wrong with that but i need to strongly encourage you not to submit your ethereum deposits to them for staking now you're going to say but man i've been with them for five years and i trust them that's where the mistake is you may trust them but what if there's some government action in the next two years that confiscates their coins what if somehow all of their contracts are drained what if they change ownership and change their organizational structure those are things that you cannot control i encourage you not to submit deposits and even beyond that talk to your friends talk to your mom who is going to stake with coinbase

because she knows it's or she thinks it's legit um talk to her talk her out of that we used to say back in the day um not your keys not your coins and that has sort of fallen by the wayside i'd like to bring that back in reference to staking because your coins are going to be out of your reach for two years and a lot can change in two years in the cryptocurrency industry so that's my big picture that is the thing i've been trying to wrap my mind around and so there are really three levels green solo staking do it now is the time for that yellow trusted trustless

decentralized staking solutions they don't exist yet therefore you must wait when trustless decentralized taking solutions become available in a matter of months then i will encourage you to participate in them fully like i'm gonna be all about it i i'm gonna play it uh the third is red that is pool staking solutions that are trusted and that is exchanges um don't do it don't do it ever don't give your coins to someone else and i know you might say but fizz they're going to give me pes beth quest less rest i don't know

whatever they're going to give you but at this time that secondary token is nothing more than an erc20 token based on a promise a promise that no one can guarantee you they will keep in the future when when the ethereum withdrawal address can be provided on deposit uh and that is in a few months then things will change dramatically and that is when um that kind of trustless staking will be possible and i can't wait to talk about that so i hope you've learned a little bit i hope you're gonna share this uh with your friends uh i have nothing

against any of these entities i i know that this needs to be a rich environment but we also have to make sure that we're taking care of our funds and we're taking care of the chain in the progress in the process so um gosh i this is the thing that i've been looking for for a couple weeks trying to wrap my head around and it all just sunk in today um with laxman's article and i'm gonna link that at the bottom i hope you'll read it it is it's so easy i can understand it so uh i hope you'll check it out and have a great monday and uh i'm i'm happy i'm i i know i know my mission for the next few weeks uh and so i hope you'll join me in promoting that

thank