Ethereum transitioned to a new consensus mechanism called Proof of Stake (PoS) in 2022. This system allows anyone to contribute to the network’s security and earn rewards by staking their Ethereum.
Earlier, running a validator node (which serves as the backbone of the PoS system) required technical expertise and expensive hardware to be run. However, MetaMask Portfolio, a popular crypto wallet, introduced a convenient solution, validator staking, on 18th January.
While MetaMask’s staking service eliminates the barriers of hardware and expertise, it comes with a cost- a minimum deposit of 32 ETH, equivalent to roughly $78,752, considering ETH’s ongoing price.
Here is a brief insight into how this works and whether it offers any value.
What is Validator Staking?
Validator staking allows you to contribute to Ethereum’s security without the technical hassle or financial burden of setting up your validator node. Through MetaMask Portfolio, you simply deposit 32 ETH or more, and Consensys Staking, a trusted infrastructure provider, handles the node operation and maintenance.
How is validator staking beneficial?
- Earn rewards– You earn staking rewards for contributing to the network’s security, which is currently around 3.8% per year.
- Secure and reliable– Consensys Staking has an impeccable track record with zero slashed validators and 99.99% uptime.
- Diverse and distributed- Your validators are spread across different regions and cloud providers, thereby minimizing downtime and reducing the associated risks.
- Retain Control– You retain full control over your staked ETH and the rewards.
- Easy to use– No complex hardware or software setup required. Just deposit your ETH and start earning.
How to Stake with MetaMask Portfolio
Here is how you can stake with MetaMask Portfolio
- Connect your MetaMask wallet to portfolio.metamask.io.
- Go to the Stake tab and select Validator Staking.
- Choose the account address you want to use for staking.
- Select the amount of ETH to stake (multiples of 32).
- Review the stake summary, rewards rate, and activation time.
- Confirm and sign the transaction in your MetaMask wallet.
Things to Consider
While the process seems pretty straightforward, and the idea seems lucrative in theory, here are some pertinent aspects you may want to consider:
- MetaMask charges a 10% fee on your staking rewards.
- You cannot withdraw your staked ETH for an unspecified period.
- There is a queue for activating your validator, so it may take some time before you start earning rewards.
Given these considerations, if you are not comfortable with the idea of a 10% fee or the indefinite lock-up period, you can consider alternative staking options. Here are a few ideas.
- Liquid staking services– Lido is a popular option that allows you to stake your ETH and receive a liquid token that you can trade or use in DeFi applications. Lido charges a lower fee than MetaMask (2.5%), but the rewards are slightly lower as well.
- Centralized exchanges– Some exchanges like Coinbase offer staking services, but they usually charge higher fees, which can go up to 25%.
Overall, MetaMask Portfolio’s validator staking offers a convenient and secure way to contribute to the Ethereum network and earn rewards. However, the 10% fee and undefined lock-up period may not be for everyone. Be sure to research your options and consider your financial goals before making a decision.
Celine Brooks is a renowned journalist and author specializing in cryptocurrency and blockchain technology. She holds a Master’s degree in Economics from Harvard University and is very passionate about Crypto. Celine regularly hosts webinars and workshops, sharing her insights and forecasts about the evolving digital currency landscape. She is also an active contributor to several leading financial and tech publications, where she breaks down complex crypto trends into understandable insights for everyday investors.