SOTS #32: Ethereum Beacon Chain Staking Best and Worst Ways to Stake

Transcript

[Music] hey everyone superfiz here state of the state number 32 i think i have been more excited about this video than any other content or idea that i've put out and because of that it's taken me several days to really get it on paper and actually several weeks to formalize the idea in my head if i do things right hopefully somewhere maybe on my face um i'm learning to use adobe premiere so hopefully you'll see this image that is the ethereum beacon chain staking risks associated with staking i don't

love the name it's in progress but this is my first draft of something that i've actually been talking about probably for months now what it does is solidify the concept that there are better and worse ways to stake the information that i'm sharing i have to back up and tell you what i see my role in the ethereum ecosystem as i consider myself the beacon chain health coordinator and in that role i want to foster a healthy community that promotes the stable growth of the ethereum beacon chain if you listen carefully to that my goal is not to promote individual users

my goal is not to make sure that users make the most money my goal is to promote the health of the chain itself and the users us me and you are parts of that system and we derive benefit from it we can contribute to the health of the network um and allow it to thrive and be as prosperous as it can be as healthy as it can be by making good choices with our staking and that kind of brings me to what we're looking at today i'm a man of caveats let me caveat that by saying that um i've shared this with a lot of people not all of the people i've shared this with like it some people feel like it reduces complex concepts to

something that oversimplifies i accept that feedback i accept that some people do not find this to be a good choice however i feel that the benefits outweigh the costs and with that i know that many people are going to come from twitter or the internet and they're going to be like oh that doesn't work because it's not scaled correctly or this should be here or that should be there it is a this is a qualitative list of staking opportunities that benefit both the user and the chain so if i were benefiting one or the other it might look different but i'm benefiting the user and the chain let's go down the list really quickly green

is so low staking if you can solo steak you should really uh and you'll find nimbus at the top of the solo staking list and while i say that it's unranked between you and me i'll tell you that there is kind of a ranking to it and that ranking is uh what i call the perceived minority of each client and right now we believe that nimbus has the least market share in order to promote the health of the beacon chain it would be great if nimbus had about 25 percent of the market share and so what i'd like to do is encourage us to consider nimbus as our first staking client until we find some kind of information that suggests that nimbus is on par with the other clients

if lodestar or another client comes online i can assure you they're going to jump to the top of the list because even though they may have bugs the health of the network means that we support those clients and we give them attention and support and file bug reports with them and give them an opportunity to get on par with other clients and that is kind of a manifestation of our biggest goal is not to make money for the end user but to promote the health of the network and that is why choosing a minority client is one of the best ways that you can benefit the solo staking nimbus teku lighthouse and prism we don't have a great metric to know what the actual beacon chain share or

what the client share of each of these clients is what we have are a lot of guesses and a lot of estimations but i feel like this is a fair ranking so basically if you're new to this you want to train nimbus that's great give tecu a try teku is an enterprise client that is developed in java and it runs really well it is kind of considered to be a little memory intensive so you want to have at least well i have 32 gigs of ram you might want to have at least 16 gigs of ram for taku whereas nimbus runs on it can run on one cpu on four gigs of ram so if you're interested on using a raspberry pi nimbus is absolutely perfect for you lighthouse and prism are both kind of all-purpose clients they run with modest hardware in a lot of environments they're

both solid and both well-developed so if you feel like nimbus and teku aren't right for you then lighthouse and prism are great alternatives all of that to say that solo staking should be the priority if you have 32 ether if you know how to turn a computer on uh even if you consider using a navado system or a dap node system those are great solo staking is the priority if you can do that i recognize that not everyone can solo steak that's okay if you still have 32 ether and you cannot run a machine to stake then there are also a couple of options for you and these are in yellow they are blocks staking and stake us there are other services that offer kind of a similar solution the benefit here is that they do not

hold your your seed phrase or your private key you actually give them a validator key well let's let's correct this in blocks staking they are a remote signer you run a client on your computer that connects to a remote beacon chain to sign transactions and on in state i believe that you give them a you create a validator key and give them that key and they stake on your behalf but you keep the private key while those aren't the same security standard as solo staking they are still a very high standard now all of these solutions all of the top six solutions require that you have at least 32 ether and it's time to recognize that not everyone has 32 either but they still want to stake

and so the best solution for not having 32 ether but still wanting to stake are non-custodial pools many of you know that none of them exist yet they just aren't here i do know they're coming very soon rocket pool is the solution that i've talked about so much and i hope this puts rocket pull into perspective a lot of people have said fizz you're a shill for rocket pool not really i like what rocket pool is doing i like that they are a solid company who is focused on trustless decentralized staking pools and for that reason i'm excited to talk about them but in terms of their tokenomics any of that stuff um i'm just it's not really my thing i'm interested in a healthy beacon chain

and for that reason when rocket pool is released i want you to watch it a few weeks but if it if everything comes back fine if things look to be going well then i would say that rocket pool is a is probably the best solution for people with less than 32 ether as we go forward hopefully there will be more more pools that use similar technology and in that case i'm going to say things like use trustless decentralized pools like rocket pool now we get to the nitty gritty so if you cannot do solo staking if you don't have 32 ether we recognize that rocket pool is still out now is when we get into the hesitancy area these are things that i

do not like to recommend yet and if you've heard me speak before i will say if you can't solo stake right now the best thing you can do is just wait and again the best thing you can do is just wait we have a committee called the ethereum due diligence committee it's a group of people who have sent questionnaires to staking pools they've collected a lot of information and right now actually they're in the process of sorting through that when they finish sorting them through that information they'll be able to rank those pools kind of on the same red yellow and green light system it may be a different system but whatever their data is it will fit into this block

and so let's say a custodial pool is top-notch well it's still not going to be better than any and then solo staking it's still not going to be better than um something like blocks or stake tool where you hold the keys and you know it's a trustless system please keep in mind that these are not pools are not preferred solutions but that doesn't make them wrong there are going to be good pools and if it if it is the only thing that works for you then by all means please participate and use a good pool that's what we're looking for at the bottom of this list are centralized exchange taking right now i know that a lot of exchanges

are offering incentives for you to stake with them they're like hey if you give us your ether we'll give you a new maserati and you'll be happy and you're like oh my gosh that's the great deal i'm making so much from staking with this exchange i want to tell you that that is a very unhealthy idea for the beacon chain right now we're seeing exchanges pour in hundreds of thousands of ethereum to create validators on the beacon chain and this is a serious risk of centralization and it gives these staking or i'm sorry these exchanges more market share of the beacon chain than we're comfortable with and that's really why i want us to push up this

chain and decentralize the beacon chain as much as possible you're gonna say but i can make more on an exchange and it's easier the fault is that it's not healthy for the network these exchanges do not have any investment or any interest in the health of ethereum they care about one thing and one thing only i don't fault them for that they care about money and what they want to do right now is to get you in their ecosystem and staking with them so that they hold your ether and you hold a placeholder token that actually has no real value once you're in their ecosystem they hope to keep you sort of locked in so that they're in control of your ether

this is just not healthy for the beacon chain and i hope that everyone will think twice before using this solution even if you have an uncle or a father or a grandparent who's like yeah i'm only going to stick with these centralized staking or centralized exchanges i really hope you'll talk them out of that i hope that you'll encourage them to explore other solutions you know you heard me just talk about custodial pools and i was like i don't like that idea but at least custodial pools offer more decentralization than centralized exchanges what would not be healthy for the beacon chain is if let's say there were four big exchanges if they controlled 66 of the beacon chain

uh together it would be anti-fragile now i don't think they're going to collude i don't think anything bad is going to happen but as the beacon chain health coordinator i want to prevent that scenario and as an ethereum holder it's in your best interest to prevent that scenario so i hope you'll work with me to do that now this data is for december 2020 and my intention is to continue developing and improving this i really hope you'll add suggestions and let me know kind of what i've missed or what you think i could do better one of the things i'm not gonna do is is kind of pump something i i don't believe in i talk about the things that i believe

are right you get the honest fizz every time i talk whether or not you like it while my intention is not to be at odds with something like centralized staking where i'm saying don't do that i use actually i have accounts at three of four of those places and i'm happy to use them they're just not right for staking while they may be great companies and while some of these pools may be fantastic i want you to use your own due diligence kind of keep in mind the health of the beacon chain as you're staking so i hope this worked out i'm gonna go try and edit this and hopefully stick this somewhere on the screen i don't know if i'll if i'll figure it out but i appreciate your time and i hope that this guide provides you some useful

information one of the things i struggle with if you watch this and don't apply this knowledge it's all for naught so if you have 32 ether and you were about to put it into a centralized exchange but you suddenly realized why it matters and you go to with a solo staking route instead then i really feel like this is worth the effort and i hope that works for you thanks your time have a great day you