Ethereum

Stake Ethereum with Kiln, enterprise-grade staking

Ernest Oppetit, Chief Product Officer
September 27, 2022

What is Ethereum?

Ethereum is a decentralized blockchain network, its native token or cryptocurrency is called Ether or ETH. Launched in 2015, it is now the world's second-largest crypto project by market capitalization after Bitcoin and it was the first to introduce smart contract functionality. On Ethereum, you can build a range of decentralized applications. As said by nonprofit Ethereum Foundation: “Ethereum can be used to codify, decentralize, secure and trade just about anything.”

What is Proof-of-Stake Ethereum?

Ethereum Proof of Stake is a major upgrade to the Ethereum network, designed to allow the Ethereum network to grow while increasing security, speed, and efficiency. Proof-of-stake is a type of consensus mechanism used by blockchains to achieve distributed consensus. In proof-of-work, miners prove they have capital at risk by expending energy. In proof-of-stake, validators explicitly stake capital in the form of ETH ether into a smart contract on Ethereum.

What is staking?

In a Proof-of-Stake blockchain, Staking consists of locking native tokens to earn the right to secure a chain, and earn a yield while doing so. It has overtaken mining as the primary way to secure blockchains.

Staking consists in locking native tokens (ie ETH) into “Validators” to earn the right to secure a chain by proposing new blocks or attesting other validators blocks, and earn a yield while doing so.

Why should you stake your assets?

Staking generates the safest and most predictable yields in the crypto space. It’s the most natural yield feature in crypto as the value origins from the blockchain native currency inflation, which is forecastable.

You can stake your ETH as well as other PoS cryptocurrencies to:
  • Put your treasury at work
  • Diversify and earn
  • Bring new opportunities to generate safe yields to your users
You stake
$100M
You get
$500k
/
every month

How to stake Ethereum with Kiln?

To stake ETH, you need 32 ETH to run your own validator and start staking. You can also participate in staking pools to mutualize your ETH (and staking rewards) with other users to reach the 32 ETH threshold.

  1. A validation key should be generated, with eth2-cli. A withdraw address must be set, it is either an Ethereum wallet or a BLS key (beacon chain format).
  2. User should send his deposit information (validation public key, withdrawal address and bls signatures) to the Deposit Smart Contract with a value of 32 ETH (deposit can also be made in multiple transactions with less than 32ETH, but it won’t start the validation process unless 32 ETH are deposited in total for the generated validation key).
  3. After 2048 epochs, the Beacon Chain will process the deposit and will propagate it. Then the validator joins an activation queue (4 validators accepted per epoch max).
  4. After the validation queue is finished, the validator is activated and is expected to process attestations and propose blocks.

What are the rewards associated with staking ETH?

As an incentive for helping to safeguard the network, you can earn up to 4.12% APR from each validator you stake on Kiln

Protocol Card
Expected yield
20%
Token
ETH
APY
4.12%
Number of live validators
400k+
Consensus
PoW/PoS ==> PoS
Node type
Full archive node and validators
Next Steps
The Merge
Q4 2022
Withdrawal enabled through Shanghai upgrade
2023

Why should you stake

your ETH with Kiln?

With more than 2.1% share of all ETH staked and heavy involvement within the community (Lido, Alluvial, Flashbots), Kiln has a strong record of staking Ethereum. Kiln is the leading enterprise-grade staking platform, enabling institutional customers to stake Ethereum, and to whitelabel Ethereum staking functionality into their offering.

  1. Stake ETH in 1 click
  2. Manage all your ETH stakes and rewards from a single dashboard
  3. Non-custodial, work with your existing custodians solutions e.g. Fireblocks
  4. SOC 2 certified and Industry leading SLAs (0 penalties recorded and 99.95% effective uptime)
Looking to stake ETH?

Get in touch with our team to discuss Prime customers advantages and unlock the full Kiln experience.

Stake Ethereum FAQ

What does Proof-of Stake mean?

Proof-of-Stake (PoS) is a type of consensus mechanism used to validate cryptocurrency transactions. Both Bitcoin and Ethereum, the two most famous blockchains, use for now another type of consensus named Proof-of-Work, that requires a not-insignificant but feasible amount of effort in order to deter frivolous or malicious uses of computing power. However, Ethereum plans to transition to the Proof of Stake (PoS) algorithm as part of their development roadmap. Main reasons are because it is more secure and less energy-intensive.

What is the Merge and the latest upgrades of the blockchain Ethereum?

The Ethereum Merge is the next big upgrade of the Ethereum protocol. It will mark the end of Proof-of-Work for Ethereum, and the full transition to proof-of-stake. It will reduce Ethereum's energy consumption by ~99.95%. The target date is September 15, 2022, but this estimate might have even a week of error.

Check our article about it.

Preparing to the Merge, The Ethereum network has already undergone a series of upgrades. The best known is the Beacon Chain, launched in December 2020, which was a milestone  for the upgrade of the consensus layer of Ethereum to PoS. The actual Merge is the last step of the process.

When to receive ETH rewards?

Staking rewards were enabled on December 1, 2020. Transfers are not expected to be enabled until sometime after The Merge with the Shangaï update, expected 6-12 months after the Merge.

Can I choose on which wallet to receive my rewards and can I split them between multiple wallets?

Yes, you can decide on which wallet to receive your rewards. You can even split your rewards into multiple wallet addresses. Kiln is WalletConnect-compatible.

Is the gas fee automatically charged on top of the 32ETH from the sending wallet or how will the network fee be charged?

Gas is the fee paid for executing transactions on the Ethereum blockchain. It will be charged on top of the 32ETH.

What are the risks associated with staking ETH?

The main risk is slashing. A validator can be slashed if:

  1. It signs two attestations with a different head
  2. It surrounds another attestation with his attestation3.
  3. It submits two attestations with the same target

To prevent any risk, Kiln in partnership with Nexus Mutual offers a coverage policy to protect against middle slashing events. Nexus Mutual is the trusted partner for tier-1 institutional funds, family offices and custodians that seek protection across crypto.

Apart from the risk of slashing, there can also be a downtime risk that means that a node is not signing transactions. However to prevent it, at Kiln we have a strong monitoring process.

Is there a minimum and maximum amount to stake for Ethereum?

Yes, you must first have 32 ETH or a multiple of 32.

Do I maintain custody of my ETH tokens? Is ETH staking non-custodial?

While you may self-custody your staked ETH (ideally using a Ledger hardware wallet), you may choose a third-party custodian or liquidity provider to control the withdrawal of your staked ETH for instance with Alluvial.

The Ethereum staking contract locks  your ETH tokens while you are staking. You will not be able to withdraw or transfer ETH before the next upgrade after the Merge and until your validator has exited from staking. After the validation key signs an unstake transaction, the validator will join an exit queue before being able to unstake the funds. There are ongoing discussions about a partial-unstake process, to withdraw only the rewards.

What is the lockup period to stake Ethereum? When can I unstake and withdraw my ETH?

Staked ETH, including rewards, are inaccessible for now. Withdrawals are not implemented yet, and will be in a future upgrade after The Merge. There will be 2 scenarios:

  1. With an Ethereum wallet key as withdrawal key: the validation key will sign an unstake transactions and the same withdrawal address will receive the funds
  2. With BLS key as withdrawal address: the validation key will sign an unstake transaction and the BLS key will sign a transaction to set as withdrawal address. The latest will receive the funds.

Should I be waiting until after the merge to start staking ETH? Will ETH go up after the merge?

After the Merge, crypto holders staking ETH might earn higher rewards as validators begin to process transactions and earn fee tips on top of protocol rewards. There are some risks to wait for the merge because there will be a long queue due to high-demand resulting in missed rewards.Right now if you stake, you are securing the Beacon chain (Proof of Stake). Currently it runs parallel to the existing chain and will eventually be merged. So you lose nothing by staking early.

How rewards and penalties work?

Every slot the validator is expected to sign attestations. If submitted attestations are good the validator receives rewards, otherwise it receives penalties. In case the validator is offline it will also receive penalties.

What is the average block time on Ethereum?

The average block time on Ethereum is ~13 sec, meaning a new block is produced every 13 seconds.

What is MEV?

MEV means “Maximal Extractable Value” and it  refers to the maximum value that can be extracted from block production. Kiln was the first node operator to deploy Flashbots’ solution on PoS Ethereum. You can check our latest article about MEV from our experts.

Where can I learn more about Ethereum?

There are many existing resources but we invite you to visit the Ethereum foundation's website and to check our latest articles about the Merge and the Ethereum blockchain on our blog.

What is an Ethereum validator?

From an infrastructure point of view, an Ethereum validator is just a validation keypair. Multiple validation keys can run in one light program called “validator”. This validator is connected to a Beacon Chain node which is peered with the rest of the network and constantly fetches the state of the chain. Kiln has 8,500 live validators on Ethereum.