• Liquid staking protocol Ether.fi is growing rapidly
• Ether.fi promises staking without loss of control
• Users are probably hoping for airdrops
On April 12, as part of the Ethereum roadmap, the Shapella upgrade (a hybrid of “Shanghai” and “Capella”) went live. Originally, the ethers that stakers deposited to join the network as a validator were frozen. But the main thing that changed with the upgrade is that validators – i.e. those users who validate the next block in the chain – can freely determine their staked ETH tokens and their reward. Since the feared sell-off did not materialize, the price of the world’s second-largest cryptocurrency rose sharply after the upgrade.
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Great interest in Ether.fi
As “BTC-ECHO” reports, in addition to ETH, the tokens of staking projects such as Lido Finance and Rocket Pool have also recorded price increases, even if the deposits into their staking platform have remained relatively stable. At Ether.fi, on the other hand, the Total Value Locked (TVL) – a metric that measures the total value of all crypto assets locked in the DeFi protocol – increased by over 30 percent, according to data from Dune Analytics. Namely, Ether.fi differs from other liquid staking protocols like Lido and Rocket Pool by the simple promise that users will keep their coins.
You have to know that validators have to anchor ETH tokens firmly in the blockchain in order to participate in the network. While they get some kind of return for staking, ETH cannot be used in more lucrative DeFi protocols during this time. Liquid staking protocols solve this problem by giving users another token as a token, which has more or less the same price and can be used on other DeFi platforms like the original to generate additional returns there.
The disadvantage here, however, is that liquid staking protocols are depot services, ie the users also hand over the keys to their ETH. However, this is in stark contradiction to the widespread credo “Not your keys, not your Crypto”. However, Ether.Fi now claims to have built a protocol that should make everyone happy. On its website, the company promises decentralization and that stakers keep their keys and therefore control.
Institutional drivers
BTC-ECHO speculates that this self-custody solution may have attracted institutional investors who care about maintaining control over their ETH. They could have invested larger amounts in Ether.fi and thus be responsible for the strong inflows. According to the crypto portal, another driver could be the prospect of future airdrops, i.e. free tokens that are given away.
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