In the past few years, major business organizations have been competing to build the new frontier of user interface and establish their dominant presence in the Metaverse, the virtual ecosystem. When it comes to the evolution of the internet, the Metaverse concept is probably the most significant step up until now.
The idea of the Metaverse revolves around the concept of a 3D, virtual domain where the users interact and relate to each other. The area is more or less like a virtual replica of the earth, without physical restrictions.
Even though the concept is still in its infancy, it is already fetching the attention of several big players in the business. Significant investors in the sector are making an increased amount of investment in the metaverse universe. If we look at the long-term inclinations, it is likely that in the coming years, this system is going to become a behemoth.
Let’s look at how you can invest in the metaverse universe.
Metaverse in a nutshell
In 1992, author Neal Stephenson painted a sci-fi concept of astounding accuracy, which he named ‘metaverse’ Little did he know that this term that he coined would soon leave the fictional realm and would attract investors and businesses from across the globe.
Put in simple terms; the ‘metaverse’ is an online portal where users can find a virtually simulated environment similar to the real world. The users can interact with each other from across the globe without any physical barrier.
This virtual reality world is presented in three dimensions. Here the users are connected to the ecosystem using their avatars. VR headsets allow these users to interact with each other in different virtual worlds. Each of these virtual worlds together makes up the Metaverse. People can sell or purchase lands and assets with digital currency or fiat money.
Metaverse investing for beginners
The best part about Metaverse is that irrespective of financial status, anyone can invest in Metaverse and earn from the platform. Several mainstream business organizations and blockchain companies are building on this infant technology.
Before starting to invest in the Metaverse, you must know that investing in the Metaverse is not limited to just the purchase of crypto assets. You can find several publicly traded companies on the platform. These companies belong to diverse sectors or industries. You can find organizations from real estate, entertainment industries, video games, and several other sectors.
Even though the concept of the Metaverse is still in its infancy, several big players across the globe are showing an increased interest in this area. Various leading platforms offer excellent opportunities to purchase and invest in the metaverse ecosystem. Some prominent platforms include Decentraland, The Sandbox, HyperVerse, Nakamoto, Bloktopia, Cryptovoxels, etc.
Buying metaverse stocks
Metaverse is still in its early stage. So the investment in this sector must be considered speculative. However, if you are someone who wishes to get on board during the initial stage, a few investments have different risk ratios. Unlike the real world, in the metaverse universe, you wouldn’t face any limitations in making investments. To add, anyone can purchase cryptocurrencies or NFTs (Non-fungible tokens).
Industries or technology companies related to the Metaverse are a great way of earning profit. Currently, the total value of all platforms in the metaverse space is around $118 billion. According to a report by Statista, this worth might increase by 39% in the coming seven years.
Purchasing stocks of Metaverse is quite easy as all you need is a digital wallet and the ability to take part in a coin exchange. While different platforms have their own sets of regulations while signing up for an exchange, the process is primarily easy once you get all your personal ID information verified.
Given below is a list of six common methods by which you can invest in the Metaverse:
- Invest in stocks at the Metaverse
- Invest in the metaverse cryptocurrencies
- Invest in some exchange-traded fund at the Metaverse
- Use NFTs to make direct investments in the Metaverse
- Purchase land in the Metaverse
- Rent or purchase buildings in the Metaverse
The top 7 metaverse stocks to buy
With several metaverse stocks captivating the interests of all significant players in the financial world, tracking all these stocks can be quite overwhelming. In this section, we have highlighted the seven most promising metaverse stocks you can pay attention to and invest in.
- Meta Platforms Inc. (FB):
The first company to come up with the Metaverse as a concept as we understand it today was Meta Platforms (NASDAQ: FB), formerly known as Facebook. Meta made its first significant investment in virtual reality in 2010. It acquired Oculus VR, the pioneer of VR headsets, in a deal of $2 billion.
A significant portion of Meta’s revenue is still generated via ad marketing on its social media platforms- Facebook and Instagram. However, in 2021, Facebook decided to change its name to Meta. It also announced its plans to focus on the development of the Metaverse.
Compared to any other VR company, Meta has generated more revenue through sales from the Oculus VR headsets. To add to it, Meta is displaying heavy investments in creating several immersive software applications and anything that contributes to the growth of Metaverse. The sole force of the company is not Metaverse. Thus the stocks of Meta prove to be an excellent option for investors who are more averse to risks.
- Microsoft Corporation (MSFT):
It is no secret that Microsoft has been a titan in the tech space for several years. Since it added the video game company Xbox to its portfolio, its adaptation to the metaverse ecosystem has been much smoother.
To add, it can integrate the Metaverse into all ranges of its products like Microsoft Teams, a product to facilitate virtual meetings in schools and workplaces. Microsoft has successfully managed to corner the market in a professional setting and on the gaming fronts. This makes it one of the most popular stocks to watch for. Microsoft also launched its virtual reality headset in 2016, with the name HoloLens. However, it hasn’t been able to hit the expected returns.
Microsoft acquired Activision Blizzard, the owner of the popular gaming franchises Call of Duty and Candy Crush Saga, at $68.7 billion. With this deal, Microsoft has placed itself quite ahead in the race to dominate the future of the online gaming industry. As of July 2022, Microsoft’s market capitalization is $2.063 trillion.
- Roblox Corporation (RBLX):
Roblox is one of the most famous gaming platforms among younger children, with over 50% of its user base comprising those aged 13 or below. The platform accounts for 11.8 billion hours of user engagement.
This platform exploits the Metaverse tech, and its plans to become a giant platform in the Metaverse industry is already thriving. From across the globe, several children interact on the metaverse ecosystem via Roblox without having to leave their homes physically. The platform plans to retain these users as they grow up.
Apart from offering a gaming experience to its users, Roblox also acts as a platform that enables developers to create their games and upload them for other users to play. With this feature, this Roblox has become a unique 3D platform that allows its users worldwide to play games, connect, and interact with each other without any physical barrier.
- Unity Software (U):
Unity Software Inc. (NYSE: U), an American multinational video game software company, was founded in Denmark in 2004. Presently, it is based in San Francisco, California. Unity Software indulges in offering solutions to developers in their game production process for 2D and 3D platforms. The company offers solutions for developers for the game production process for both 2D and 3D platforms.
The company leads in the sector of 3D software development in the metaverse space. Metaverse requires ample content, and as per Unity’s estimation, a whopping half of the 3D content on the metaverse platform has been produced with Unity’s software. Considering all this, it is safe to say that Unity is the market leader and possesses a unique value proposition.
- Nvidia (NVDA):
Another company that can be a top pick to cash in on 3D content creation is Nvidia (NASDAQ: NVDA). NVIDIA is a tech giant specializing in creating graphics processing units (GPUs). Nvidia manufactures integrated circuits needed for electronic game consoles and personal computers (PCs).
In recent years, Nvidia has been taking a keen interest in virtual reality and creating various metaverse-based products. With the help of these products, the users can develop a virtual 3D model of the physical world.
The company introduced the beta release of Omniverse in 2020. It tagged Omniverse as the platform to connect the Metaverse into a shared virtual space. Although the product has been made available generally since late 2021, it has already been downloaded and used by tens of thousands of content creators across the globe.
- Matterport (MTTR):
Matterport (NASDAQ: MTTR) is the platform that provides its users with 3D spatial mapping technology. This technology helps scan real-world locations for its augmented and virtual reality applications. The platform then uploads these scanned locations to its cloud servers, and users worldwide can access it through subscriptions.
These subscriptions account for more than 70% of Matterport’s sales. The company gets the rest of its earnings through its product businesses. Since it is the first company to enter the Metaverse with this niche and has been succeeding, it gives it an edge over others. It could turn into a much larger business over time and can attract fantastic offers from other techs or real estate firms that have their inclination towards the metaverse industry.
The year 2020 was nothing less than astonishing for the business. The sector witnessed a growth in its sales by 87%, going up to $85.9 million. However, since that time, the growth rate has crumbled considerably. However, even now, it is expected to generate a healthy $125 million to $135 million in sales by the end of this year. This would account for around a 12% to 21% growth rate.
Plus, this would allow the sector to convert more of its free users to the premium (paid) ones, generating great future results.
- Alphabet (GOOGL, GOOG):
We all know how Alphabet’s (NASDAQ: GOOGL, NASDAQ: GOOG) Google has been a dominant player in the internet world for the past few decades. Even today, it is the gateway for the majority of the users of the internet world. With its dominance and influence, it is safe to assume that if the Metaverse is the 3D internet, Google would be a major player. Apart from this, Alphabet is also effectively penetrating into the businesses related to augmented reality and virtual reality. This would further help it expand its scope in the metaverse ecosystem.
In 2020, it acquired North, the market for smart glasses that would enhance the virtual reality potential. Under the project Iris, Alphabet is set to build a VR headset that would have the potential to compete with the Oculus Qwest 2 headset of Meta. Another achievement consists of Project Starline of 2021. With this project, the company efficiently combines the software and hardware competencies to create a ‘pane of glass’ that would serve as a 3D display.
Investing in metaverse cryptocurrencies
One of the ways to earn profit in the Metaverse is by investing in the metaverse currency. Most metaverse companies tend to have their digital currency or use an existing cryptocurrency.
One of the reasons behind the development of cryptocurrencies was to move people from the real to the virtual world. With the help of digital currency in the virtual economy, people can have borderless transitions and interactions. This was not feasible with the help of fiat currencies. We can take Decentraland as an example. It is a virtual browser-based third-dimensional platform that features games like Genesis City. Decentraland has successfully hosted several virtual events by significant brands like Adidas and D&G.
Participants of the Metaverse can use cryptocurrencies like MANA on Ethereum to purchase or sell plots or lands in this virtual universe. These virtual lands and plots serve as good investment options. However, users must note that these prices can be highly volatile, making it a comparatively riskier investment strategy.
The Theta blockchain, the first one to market the CDN (content delivery network), is another great example. This company has its cryptocurrency called THETA. Users can purchase its cryptocurrency as a means of investment in the Metaverse. Purchasing crypto assets is one of the simplest ways of investing in the metaverse industry.
Investing directly in the Metaverse
Making a direct investment in the meta world is another effective way of investing in the Metaverse. It works similarly to purchasing a piece of land in the real world. Just like in the real world, you can purchase or rent land in the Metaverse. You can also ‘live’ in it with the help of your ‘avatar’. You can purchase or rent this digital space or land with the help of cryptocurrencies or, sometimes, even with fiat money.
The metaverse ecosystem offers an optimized third-dimensional experience to its users. The assets in the metaverse universe are in the form of NFTs (non-fungible tokens), and thus the users can easily claim their ownership. One of the several benefits of purchasing land in the Metaverse is that apart from being the virtual land owner, you can also put your property on rent or sell your property with the help of an exchange or directly via the metaverse platform.
Generally, you will need cryptocurrencies to purchase land in the Metaverse. Some commonly used cryptocurrencies in the Metaverse are SAND, Ethereum, MANA, etc. So the first step towards purchasing these virtual lands is to own these currencies.
Metaverse ETFs as an alternate option
Another trending investment opportunity in the metaverse realm is the ETF. ETFs or the Exchange Traded Funds act like a basket of securities you can trade on the stock market. These offer various kinds of funds that an experienced fund manager trades.
ETFs are, in a way, similar to usual mutual funds. Both of them feature a group of stocks that are organized into a single asset offering optimum returns. However, one major difference between the two is that an experienced manager trades to preserve and attain maximum market value in the case of ETF.
ETF can be seen as a combination of traditional shares and mutual funds characteristics. Like mutual funds, ETF is a collection of securities across companies. However, you can trade ETFs as a bundle on the stock market, just like shares.
Across the Metaverse realm, you can find several metaverses ETFs. Some of the Metaverse ETFs you can invest in include eToro Metaverse Life Smart Portfolio, Roundhill Ball Metaverse ETF, The Simplify Volt Fintech Disruption ETF, ProShares Metaverse ETF, Evolve Metaverse ETF, Subversive Metaverse ETF, etc.
The Future of the Metaverse looks bright
The Metaverse is a recent development and is still in its infancy. However, it is already attracting several investors and businesses across the globe. Several data, analyses, and reports suggest that the Metaverse has a high potential for growth, development, and profit.
The Metaverse offers endless possibilities for investors and individuals looking for potential investment opportunities. No industry doesn’t come into the ambit of the metaverse phase. Let’s say you are someone with a keen interest in real estate. How does the idea of purchasing land or a house next to that of Snoop Dogg sound to you?
One of the most significant features of the Metaverse, making it an emerging virtual world, is its diversification. There is hardly any industry that the Metaverse doesn’t have the potential to affect. From purchasing designer clothes to buying ETFs, from the gaming industry to the real estate industry, the Metaverse covers it all. Undoubtedly, the emergence of the Metaverse is one of the most interesting aspects of the tech we have come across.
There are numerous ways by which you can invest in the realm of the Metaverse. You can purchase the metaverse stocks which are on the boom and make waves like Meta, Roblox, Microsoft, Unity, etc. You can also purchase the metaverse cryptocurrencies to invest in the Metaverse. Several industries in the metaverse ecosystem tend to have their digital currency or use existing cryptocurrencies. You can also opt for investing in the Metaverse ETFs or the Exchange Traded Funds.
Apart from this, you can make direct investments in the metaverse realm by purchasing or renting land, property, or assets in the Metaverse. The process is more or less similar to making purchases in the real world. You can purchase, rent, or even ‘live’ in these virtual houses and land spaces. After claiming ownership of the land, you can even rent it to make profits. You’d generally need cryptocurrencies to purchase or rent land in the Metaverse.
Even though the Metaverse is still in its growing stage, the potential for its growth in the coming years is imminent. Even in its initial stage, the Metaverse attracts the interest of several investors, crypto enthusiasts, and business organizations across the globe. Crypto analysts and organizations believe the Metaverse will be an emerging technology in the coming years.
While there are certain risks and uncertainty, the potential for growth and gains outweigh these risks by a wide margin. So if you are considering investing in the metaverse industry, irrespective of whether you are a beginner or an influential player in the crypto world, the metaverse industry would surely be a great investment.
There are several methods by which you can invest in the metaverse realm. You can choose to purchase the metaverse cryptocurrencies, the assets, or the Metaverse. In the metaverse world, you can purchase land, a house, a shopping complex, or other properties. You can purchase metaverse stocks like Meta, Microsoft, Unity, Roblox, etc. You can even invest in the Metaverse by investing in the Metaverse ETFs or the Exchange Traded Funds.
While deciding on the type of investment, the best way to invest in the Metaverse would be the way you feel the most comfortable. While getting started with Metaverse investments, most people tend to choose to invest in stocks or ETFs. This is because, in these investments, you don’t need the presence of the Metaverse. Instead of cryptocurrencies, you can use US dollars for purchases.
However, if you are someone already acquainted with the Metaverse and are playing, shopping, and interacting in the ecosystem, you might want to invest in NFTs, cryptocurrencies, and virtual lands.
If you plan to make any purchase in the Metaverse, you are most likely to use cryptocurrencies. You can choose any metaverse-based cryptocurrency, like MANA, SAND, etc. You can purchase these currencies via cryptocurrency exchanges like Coinbase.
With the help of the stock exchange platform of your choice, you can purchase the stocks of companies that are highly active in the Metaverse ecosystem. Apart from these, you can also opt for an exchange-traded fund with companies with roles in the Metaverse. For instance:
- Roundhill Ball Metaverse ETF
- Subversive Metaverse ETF
- ProShares Metaverse Theme ETF
Yes, several companies are working on the metaverse initiatives, whose stocks you can invest in. Such companies include Roblox (RBLX), NVIDIA (NVDA), Microsoft (MSFT), etc.
You can purchase stocks of companies working in the metaverse realms. Since the Metaverse is still in its growing stage, it would be best that you invest in the stocks of the bigger companies that are already thriving in the realm, and their growth will only be boosted in the future. You can think of investing in companies like Meta, Unity, Nvidia, Cloudfare, Roblox, etc. You can purchase the stocks of these companies on the traditional stock exchange platform of your choice.
What is Lido and how to Stake ETH with Lido
Staking refers to holding funds in crypto wallets and supporting a blockchain network’s operation. Holders are also referred to as stakers and are rewarded for their effort. ETH is one of the first programmable blockchains, allowing decentralized games and financial services deployment via its smart contract capabilities. Since its inception, Ethereum has experienced tremendous growth. But due to its high gas fees, the platform’s growth is hindered.
Ethereum is transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) network to improve its security and scalability. Ethereum 2.0 is slated to be fully deployed by September 2022. Following this transition, the ETH network will rely on validators staking their tokens and helping secure the network in exchange for rewards
Lido is a staking platform based on the ETH blockchain. Top blockchain staking providers support it. Usually, you would need 32 ETH to become an Ethereum validator on the ETH 2.0 Beacon Chain, or you use different staking pools. Lido is unique to the industry and allows you to stake any Ethereum (ETH) amount. Lido’s novelty is that you can deploy your staked Ethereum across DeFi apps. Stakers do not have to choose between DeFi participation or staking Ethereum.
Lido gathers all the deposited Ethereum (ETH) from users. Users receive stETH, the native asset, in exchange for their ETH deposits. The protocol stakes the deposited ETH through a trusted group of node operators on ETH 2.0. It aims to eliminate various problems while staking Ethereum and reduce illiquidity and immovability. In simple words, Lido allows you to stake Ethereum anytime without worrying about a lock-up.
Users can stake ether (ETH) on the Lido platform and receive staking rewards for securing the Ethereum blockchain. Stakers receive stETH representing the amount of ETH staked at a 1:1 ratio. The main advantage of using the Lido platform is that you can use stETH in the same way you would use regular ETH. Moreover, the staking rewards are received daily with no minimum deposit or lock-up periods. Staking on Lido enables users to enhance their security without any risks.
The Annual Percentage Yield (APY) for the staked ETH depends on the network’s total amount of staked ETH. As the staked ETH increases, the APY decreases. Users should also remember that Lido will apply a 10% fee for your yield, which will already be deducted from your rewards. The protocol uses pooling to transfer the liquidity from L1 to L2, which also incurs a small gas fee for your part of the share of the transaction.
Features of Lido
Lido is the most flexible and effective way to stake their ether (ETH). It also contributes to the decentralization advantages of the Ethereum network. Lido’s liquid staking feature and the governing DAO are set apart from other protocols. Users can earn rewards using liquid staking protocols, which means you don’t need to lock assets or maintain a staking infrastructure. Soon after the tokens are deposited, users receive liquid tokens in exchange. These tokens are staked by the DAO-based smart contracts elected by the staking provider. These providers don’t have access to the assets provided by users since the Lido DAO manages these.
Benefits of staking with Lido
Lido allows ETH staking without interacting with DeFi apps. In addition, Lido allows users to keep complete control over their staked assets. Users choosing to stake with Lido have the following benefits
- Earn staking rewards without lock-up periods.
- Users can earn rewards 24*7.
- Users don’t need to stake 32 Ethereum.
- Reduce the risk of losing staked ETH through software failures.
- stETH can be used in the DeFi space ( collateral for DeFi loans or yield farming on Curve Finance).
Despite Ethereum 2.0 holding majority support, there are chances that it might not be implemented according to the official roadmap.
In addition, there are also unavoidable risks associated while using smart contracts. For instance, smart-contract networks are vulnerable to security risks like hacks and self-inflicted failures.
Therefore, DeFi platforms such as Lido are particularly vulnerable to security threats. These platforms offer exit transactions that are triggered by permissionless means to their users. This enables them to close down validators and take the ecosystem under their control. But to avoid such scenarios, Lido is audited by industry leaders in blockchain security such as Quantstamp, MixBytes, and Sigmaprime.
- Connect your wallet:
- Select the amount of ETH to be staked
- Confirm the Transaction
Lido is a liquid staking protocol on Ethereum, allowing users to stake any amount of ETH. The protocol issues a stETH, the tokenized form of staked Ether, on a 1:1 ratio as a reward. It combines your initial staking deposit and the daily staking rewards. The stETH balance is updated daily at 12 pm UTC via token supply rebase to reflect earned stake rewards. Lido’s stETH token can be used just as ether (ETH). Holders earn rewards through integrated platforms like Curve or SushiSwap, sell stETH tokens, convert them back to ether (ETH), or use them as collateral for DeFi lending.
Lido DAO and the LDO token
The Lido DAO (decentralized autonomous organization) manages the Lido staking protocol. It represents the community that develops the necessary tools and services to stake Ethereum. The members of the Lido DAO monitor the growth and development of the Lido protocol. This DAO is also responsible for the technical development of the platform and promotes Lido through educational content and other activities.
The LDO token is the governance token responsible for the decentralized ownership of Lido. LDO holders can vote on any decision affecting the future of the platform. The amount of LDO determines the voting power. These tokens can also be used to manage fee parameters and add or remove nodes from the network.
Staking ETH on Lido is a convenient way to stake on the Ethereum 2.0 network. There are several ways to generate passive income in the crypto space, and Lido ETH staking might be the one. After all, you don’t have to worry about your ETH getting locked up. As with other staking protocols, you can claim your digital assets anytime without them being locked up for one year.
Frequently asked questions
Besides helping to secure the Ethereum 2.0 network, Staking Ether (ETH) using Lido can make you earn decent rewards over time.
Anyone can stake ETH on Lido, as there is no minimum required amount to start staking. You can also unstake your crypto anytime, and rewards are distributed daily.
Lido DAO (LDO) tokens cannot be staked. They can only be used for governance votes and trading purposes.
Lido finance has a 10% fee automatically applied to your earned rewards. This fee is applied only when you start earning staking rewards.
Yes, Lido is a DeFi application.
Yes, the Lido liquid staking protocol has been audited by industry leaders such as Quantstamp, MixBytes, and Sigmaprime.
Once you stake Ethereum on Lido, the stETH tokens on a 1:1 ratio will be issued. This stETH can be used as collateral to get a DeFi loan, or you can exchange it for another asset.
Anyone with a decentralized crypto wallet and some ether can start staking ETH with Lido. Just connect your wallet to the Lido app, select the amount of ETH to the stake, and then confirm the transaction from your wallet. The Ethereum staking rewards are awarded daily.
Using the Lido protocol for ETH staking can help you generate passive income and put idle ETH into use.
What are nodes?
The nodes in a blockchain can be considered to be the network stakeholder. The devices that hold these nodes are mainly required for keeping track of the distributed ledger and solving the purpose of communication hubs for various tasks in the network. The nodes in the blockchain are mostly employed to confirm the legality of a transaction and how valid each subsequent transactions in a block are. These are extremely important in blockchain as they allocate distinctive identifiers to individual networks that help in differentiating and distinguishing a node from the other present nodes in a blockchain network. Other than legitimizing and storing data, the nodes constantly synchronize these data with the blockchain by updating the transaction history.
The blockchain nodes are a highly integral part of the blockchain infrastructure, and one of its main objectives is to develop and enhance the security of the data by maintaining the integrity of the data and also providing credibility to the network. Every network transaction that is linked with the blockchain note can be verified with it. No two nodes are similar and nodes are distinguished from one another by their unique features. Blockchain nodes are also beneficial in managing the transactions and propagating the growth of net worth, which can be done by sharing new data with the other present nodes. It is also responsible for putting in place an algorithm that assists the networks in always staying updated. Nodes are considered essential because they can handle transactions, process the data, and communicate this data to other nodes. They are also beneficial on the grounds of helping the growth of the blockchain and getting access to the blockchain ledger via the use of the blockchain explorer. Blockchain nodes are crucial for agreeing and rejecting data and validating transactions. They can be considered to be shared and immutable ledgers that are cryptographically linked to the next one.
A hash is considered to be the function that is required to meet the encrypted demands which are needed for bringing solutions to blockchain computations. These hashes are flexible and are not fixed in their length, thus making it almost impossible to guess their size if someone is trying to hack into the blockchain. If you are looking to solve a hash, then you have to start with the data that is available to you in the block header and subsequently solve a numerical problem. These block headers are an umbrella term for a version number, a time stamp, the previous block’s hash, the Merkle root’s hash, the nonce, and the target hash.
Hash Mining in cryptocurrency is considered to be the mathematical value in which a hashed block header must be less or equal for an upcoming block to be rewarded to a miner. The block headers are responsible for identifying the individual blocks in a blockchain. This mining process can be understood as accumulating cryptocurrency as a form of reward for work that the user completes. The target hashes are used in some proof of work systems that set the current mining difficulty. When a crypto currency blockchain uses more than one system for mining, it eliminates the need for a target hash.
Types of blockchain nodes.
Following are the types of blockchain nodes,
- Light Nodes- These nodes do not take responsibility and store data from the entire blockchain. The lightweight nodes are responsible for keeping track of their own transactions.
- Archival Full Nodes- Full nodes give support to the network and validate each block by storing the entire blockchain. These nodes take account of the ability of transaction verification, network status communication and transaction validation while also handling the consensus.
- Pruned Full Nodes- These nodes provide space for storage by saving the option for users by deducting old blockchain blocks. The oldest transactions can be erased by downloading the complete blockchain from the very beginning in order to help this node function.
- Mining nodes- These nodes can be used for developing new blockchains that will help crypto mining.
- Authority nodes- These nodes are being utilized for decentralized network cases. The development team is responsible for deciding the number of authority nodes required.
- Masternodes- They function to authenticate and store transactions but do not add blocks to the blockchain. The rewards that are earned by running a master node can be shared via the users with others. The DASH network uses master nodes.
- Lightning Nodes- this is different from the other listed types of nodes. These have the potential to reduce the load of the network. They provide a helping hand to the users who do not use blockchain and allow them with chain transactions. This blockchain node is popularly used due to its quick and cheap transaction availability.
The reasons why you should consider running a node are:
- Anyone and everyone are liable to set up a node by simply downloading the particular blockchain’s software into their personal device at any time and from anywhere around the world.
- The blockchain nodes do not depend on any validation being provided to them from the system’s apps, as a universal consensus mechanism does their checking and verification.
- Running a node gives users access to interact with other blockchain networks more privately and securely
- The user gains more ownership and does not have to rely on any other organizer or running party.
- Not only is the entire process of running on a node extremely simple it also helps in strengthening the hardiness of the network that it is connected to.
- Even though there is an absence of physical or monetary rewards, running a complete blockchain node will result in intangible benefits. These benefits include the security of the transactions that are being conducted by the user and providing all the latest and important information regarding the blockchain.
- If you are an investor, then running a node will help you in monitoring the health of the blockchain and will also ensure valid and accurate trading transactions.
Basics of setting up a node
The major steps and requirements of setting up a node are the following,
- Laptop or a personal desktop with a recent version of Linux Mac or windows
- A least 7GB pruning setup and about 340 GB of free disc space for complete node setup.
- 2GB memory RAM.
- Broadband internet connection with a speed of 50 KB or above
- Minimum 6 hours a day dedicated to the running of the node.
- Download and install the bitcoin blockchain core. Download the file and start the installation process.
- Set up the blockchain Bitcoin core and download the Bitcoin blockchain. Follow the instructions one by one and complete the process of installation.
- Configure the network- establish both the inbound and outbound connections to the other present nodes in the blockchain network. Verify your connections and test the connections at the site when the node has been completely synced with the Bitcoin blockchain.
- Enhance the privacy of your blockchain node- if you are planning on running a complete Bitcoin node, it increases the risk of being targeted by hackers who seek to take down the entire Bitcoin network. Even though it is a difficult task, you can run your Bitcoin by an anonymity-focused network that helps you avoid such scenarios by enhancing your privacy to the next level. This will help you in not letting others discover you in the network.
Nodes in the context of blockchain or cryptocurrency can be considered the backbone of blockchain infrastructure as they are the main unit of storing, verifying, saving, broadcasting, and distributing data to other nodes. It is one of the numerous other similar devices that function the blockchain protocol software and is considered the storehouse of all the history of transactions. It is connected to each other via a decentralized peer-to-peer network. They also help in enforcing the consensus of rules of the blockchain. A node is one of the most important parts of cryptocurrency required to facilitate the most popular tokens such as Bitcoin or Dogecoin functions.
A bitcoin node is a computer that is connected to other computers to share information and follow the rules. Nodes play a significant role in the operations and functioning of the cryptocurrency network. Nodes can be of two types in a bitcoin network. They are full nodes and light nodes. Though people often confuse a full node and a node as the same, they have considerable differences. A full node validates transactions and blocks within a bitcoin network, thereby supporting it. As the name suggests, light nodes are lightweight and require less download and storage capacity. Unlike full nodes, they do not store the entire blockchain. These nodes download blockchain headers only. The main task of lightweight nodes is to verify the transactions carried out in a bitcoin framework using simplified payment verification. There are further divisions of full nodes into pruned nodes and archival nodes. Pruned nodes download blocks in a chain from the beginning. These nodes delete the older blocks once their storage capacity is full. On the other hand, archival nodes take up larger hard drive space as they host the entire blockchain.
A full node is used to verify transactions on the blockchain and includes a wallet.
Crypto wallets aren’t necessarily the network’s nodes, as they don’t automatically assist in validating transactions on the blockchain. However, lightning nodes, which validate off-chain transactions, can serve as nodes. Furthermore, full nodes can include a wallet function for storing crypto.
7 Ways To Survive The Crypto Bear Market
In 2022, the crypto market has taken a downturn, and we are facing the blues of the crypto winter. Even the largest players are facing the adverse effects of this market. Not intending to generalize the lines, we can’t deny that making money in the bull market is not that big of a deal. But earning benefits during a bear market is not everybody’s cup of tea. How efficiently you navigate the bear market of this intensely volatile crypto world proves how good a trader you are. With another crypto winter in for a while now, we can see how every small and big player in the market is optimizing their investment and trading strategies to survive this bear run.
A strong market sell-off that features a large-scale decline in price for a considerable period is referred to as the bear market. In this situation, the supply is more than the demand, and as a result, prices decline. Such a situation lowers the confidence of the investors.
Investors who hold a pessimistic approach and believe that the prices will continue to fall are called bears. Bear market trading can be tricky, specifically for traders who don’t have much prior expertise. While the bear market also occurs in traditional markets like real estate, forex, stocks, etc., the ones in the crypto realm are much more volatile.
This might be because, as an assets class, the crypto market is just around a decade old, making it relatively new to investors. In addition, within just a short period, it has witnessed a series of ups and downs. Thus the certainty of this market is often questioned.
Bull v/s. Bear market
Take the circumstance just the dire opposite of the bear market, and you get a bull market. It occurs when the asset class price is on the rise for an extended duration, due to which the value of your portfolio surges.
When the investors are confident that the price of an asset or an asset class will rise and will continue to do so for a prolonged period, we can witness the bull market. Due to this belief of the hike in the price of the assets, the investors start purchasing and holding them, thinking they would benefit the most from the bull market. With such an increase in demand, the prices start increasing, turning the bullish market into a self-fulfilling prophecy.
While some investors might be bearish in any market, most have a bullish approach. As compared to the bull market, the bear markets are short-lived. They are a more challenging period to make investments and maneuver.
One of the major factors in deciding the bullish or bearish trend of the market is the investor’s psychology. Apart from this, several other factors include supply and demand, socioeconomic stability, activities in the broader financial market, etc.
Generally, the bear market is associated with a short duration during which the price of the assets takes a dip of around 30 percent compared to their all-time highs. When it comes to the concept of crypto winter, it is more disastrous as compared to a regular bear market. Crypto winter is the most shuddersome period in the short history of the crypto realm. It refers to a prolonged bearish market condition, continuously extending up to several months.
Under such circumstances, the price of most of the assets in the crypto world continues to fall. This fall in price during the crypto winter tends to be quite steep. For instance, the last crypto winter, which occurred in early 2018, and continued till mid-2020, witnessed the Bitcoin shedding almost 88% of its value compared to its then all-time high (ATH) price. Apart from this, several other popular coins witnessed a 90 to 95% drop in price compared to their then ATHs.
Best strategies to overcome a bitcoin bear market
Bitcoin is the oldest and the most popular coin in the crypto universe. It’s a trendsetter for the market. The first signs of the effects of the market’s ups and downs are most often visible in the price movement of Bitcoin. By far, the other cryptocurrencies follow Bitcoin and take the turn that Bitcoin takes. This holds even when the market recovers and preps for the eventual fresh bull run.
Bitcoin has been at its lows for several weeks in the present crypto winter run. Almost all significant coins, including Ethereum, Tether, Cardano, etc., have been facing similar blues with the alpha crypto shedding its value. However, if we look at previous data on Bitcoin, it has a history of always bouncing back.
Due to this previous trend, a major share of crypto experts and industry insiders are of the notion the best way to survive a Bitcoin bear is to Hodl and wait for the storm to pass. They suggest that at such a moment, we should avoid giving in to the urge of panic selling and have a futuristic long-term-based outlook. Apart from this, most of the points we would discuss would also apply to the Bitcoin bear market.
Top 7 ways to survive a crypto bear market
- Stay calm and assess your options
The first thing that you have to pay attention to is to keep your calm. Whether you are someone who thinks that the bear market would serve as an opportunity to purchase the dip, or the one who gets stressed when the crypto prices start falling, you must ensure that you don’t get too worked up with the situation. You must calmly and objectively assess the situation. Emotional and rushed decisions that are not backed by solid logic and strategy would most likely subject you to regrets in the run.
- Don’t try to time the bottom
Do NOT be of the view that you can accurately time the bottom. Nobody can make accurate predictions regarding the bottoms irrespective of how learned they are in the crypto universe. You can listen to as many experts or go through several technical and fundamental analyses, but ultimately, you must rely on your gut feeling when trying to time the bottom.
The worst part is, in the crypto bear, you may purchase some asset at a price that appears to be the bottom at the time. However, the price might drop further; if this happens, you will ultimately have to sell it again to have another shot at timing the elusive bottom. Generally, this strategy just shrinks your wallet. The situation is even worse during the crypto winter.
- Dollar-cost averaging (DCA)
DCA, or Dollar-cost averaging, is probably the most effective strategy, even in the most bearish market trends. It is a simple strategy but focuses on long-term benefits. Under this strategy, you must keep purchasing small assets over a specific period irrespective of the price.
For example, per the DCA schedule, you will have to invest $50 in Bitcoin weekly. Now, supposing that you started purchasing Bitcoin for $50 every week and continued this act for three years, your total investment would be $7,850 in Bitcoin.
Now, when you’d calculate the total value of your investment, it would stand at $21,777. This significant gain of 177.42% of the percentage chain over these three years.
- Consider staking
Amongst several effects of the crypto bear, one is that the value of your portfolio starts taking dumps. At this time, staking could be an efficient way of earning a passive income through your crypto stash. It is the process in which you lock away your coins on a PoS (proof-of-stake) blockchain for a certain period and gain rewards.
Under this system, the size of your wallet will increase even during the blues. Plus, when the market revives and goes to the bullish trend, you can start with more than what you previously had. Moreover, since your assets are locked on a blockchain, this would lower the possibility of panic-selling assets.
- Avoid shorting in a crypto bear market
Traders use the shorting technique to profit from the falling prices of cryptocurrencies. Ideally, this technique should serve as the perfect fit for the bear market where the drop in prices is a common occurrence. However, most experts and advisers are not in favor of the shorting technique. This is because this process also holds the potential of severing unlimited loss or liquidation of your position. If things go sour with shorting, no matter how experienced you are, you will not be able to handle it easily.
When you purchase a crypto asset (go long), you will never lose more than the amount you have invested. Plus, the gains have the potential to be limitless. However, in the case of shorting, the maximum you will earn from the trade is the amount by which you short a coin. But if the price of the crypto starts increasing and continues to do so, the losses can pile up indefinitely. Furthermore, if you decide to short using margin, apart from the original loss, you will have to keep paying the interest charges for as long as you keep the position open.
- Carefully assess the current state of the market
With numerous activities taking place globally in the crypto universe, you must be updated with the latest events and have situational awareness regarding the current state of the market. For instance, in mid-2022, amidst the current bearish trend, several major institutional investors purchased Bitcoin for $30,000. Thus, BTC seems to have found essential support near this range and is expected to hold the position for a while. Simultaneously, several indicators indicate that a large group of new investors who probably purchased near the top has sold most of their assets amid FUD. This might further stabilize the prices of crypto assets.
- Avoid leaving your crypto on exchanges
While you must avoid leaving your crypto on the centralized, custodial crypto exchange in any situation, you must be even more careful during bearish trends. In the turbulent bear state, the risk of losing your funds stored in the exchanges increases. A sudden market crash can result in billions of dollars being wiped out from the market. Several exchanges will become insolvent. Opting for a non-custodial wallet app or a tried-and-tested hardware wallet will give you complete control over your crypto stash.
Crypto winters are not the end
We cannot deny that bear markets bring several huge risk potentials. But then again, the fact that they make a good basis for your chances of success in the succeeding bull market is also undisputed. This is if you can handle these bear markets well with proper strategic planning and patience.
The crypto investors and experts suggest that you can take certain steps to efficiently manage your portfolio instead of making wrong decisions and suffering from loss in the bear market.
Since they are new assets introduced just around a decade back, the crypto market is surely volatile. However, the increasingly widespread adoption of crypto assets globally in all sectors indicates that these are here to stay. The experts anticipate that the number of jobs offered by the cryptocurrency industry will only increase in the coming days.
Of course, no matter how skilled or seasoned you are in this game of the crypto market, you can’t have a 100% strike rate. As a trader or investor, you are bound to lose money occasionally. However, if you follow the steps mentioned above and strategies, you will have the potential to significantly reduce your chances of bearing losses in a bear market.
There is no specified time for the bear market to last. Generally, it is said that the crypto bear lasts for a lesser time as compared to the bull market. However, it’s not always the case. It might extend anywhere from a period of a few weeks to even more than a year. The times when the crypto bear extends to several months is known as a crypto winter.
Yes, the blues of crypto winter is just as real as the warm bullish trend. The crypto winter is a situation when the bear market extends for several months and the prices of the crypto assets continue to fall. It is a very fearsome aspect of the market where the dip in prices is quite steep.
By now, it is said that the crypto world has witnessed 8 winters, all of which were unique in their way, with certain similarities. However, there is no specified time frame for which a crypto winter exists. The most recent crypto winter before the 2022 winter was the one that we witnessed in 2018, and it lasted for around 250 days.
A bear market refers to the market condition where the supply surpasses the demand, and as a result, the market witnesses a prolonged drop in asset prices. During this situation, your portfolio is likely to shed value. The bearish blue might extend from a few weeks to several months. The bullish trend of the market is just the opposite phenomenon. Here the prices for the crypto assets increase and remain on the rise for an extended period. As a result of this, ultimately, there is a surge in your portfolio valuation.
If we take a look at the market trends from the advent of the year 2022 to now, we will notice that Bitcoin, along with several other major cryptocurrencies has fallen in its value as compared to its value in November 2021. To add to it, even after several weeks, the prices continue to fall, and several organizations, big and small, are taking several steps to deal with the bear market conditions. These trends and activities indicate that the crypto market has entered the bearish market trend, or we can even safely say the crypto winter.
Those investors of the market who hold a pessimistic view of the prospects of the crypto market are referred to as the bears of the crypto market. They expect the prices of the crypto assets to fall in the near to medium term.
Those investors of the market who hold a pessimistic view of the prospects of the crypto market are referred to as the bears of the crypt
The insiders or the traders, the experienced players of the crypto world, and expert analysts generally suggest holding cryptocurrencies or crypto assets as the safest bet during the bearish market trend. According to them, holding these assets patiently and without losing calm, is the safest way to navigate through the risks and uncertainties of the bearish blues.
o market. They expect the prices of the crypto assets to fall in the near to medium term.
What is Polkadot (DOT)?
Launched in 2020, Polkadot is a system that connects other blockchains to help share data. This is mainly done for the value and date sent across incompatible networks. Polkadot is used for both staking and governance of cryptocurrency and other exchanges.
As a part of the governance token, the user has a say in the protocol’s future. They can decide the functioning of the protocol. While with the help of staking a token, one can use the coin for investment purposes. The Polkadot token can be exchanged for transactions.
Under the Polkadot protocol, one can operate a blockchain with the user’s generated blockchains. It is one of the competing blockchains that aims to grow an ecosystem of cryptocurrencies. Though Polkadot is an innovation in the blockchain network, it tries to bring a revolution in the process of transaction and governance.
The flagship project of Web3 foundation, Polkadot, was started to create a space where identities and data are maintained and safely secured from any central authority.
Gavin Wood founded Polkadot along with co-founders Peter Czaban and Robert Harbermeir. While Gavin played a crucial role in the Foundation of Ethereum, Peter is the technology director of Web3 Foundation. Robert has done thorough research and development on blockchain and its functioning.
In 2015, Gavin Woods founded Parity Technologies, a company that aims to implement projects built on Ethereum. It is a software essential to power the Ethereum network. Parity Technologies now maintains Substrate, a development software used by Polkadot parachains.
The Web3 Foundation is building polkadot by partnering with entities with knowledge in cryptocurrency’s field, application, and services. This includes research from Ihria Paris, ETH Zurich and developers from Parity technologies, capital partners from Polychain Capital, and other crypto-funds working together to build this excellent network. Web3 Foundation is sanctioning the grants. Gavin Wood, along with Pete Czaban, manages the Foundation.
Polkadot includes both the responsibility of investment and governance. Under investment, there are three types of blockchain that Polkadot works with. Relay chain, the main Polkadot blockchain, is the one where the transactions are finalized. This is mainly done to speed up the new transactions. This runs by the method of nominated-proof-of-stake. Second is the Parachain which are custom blockchains that confirm the transactions.
One can work as a validator, nominator, collator or fisherman in this network. While a validator is the one who approves the data in the parachian block, a nominator is someone who selects the trustworthy validator for the relay chain. The collator is someone who manages the history of each parachain. The fishermen monitor the behavior of the validator.
Additionally, one can also work as the governance in software development by being a part of the council of DOT holders or the technical committee, which manages the special proposal of the members.
Polkadot is a blockchain technology revolution aiming to bring greater independence and decentralization in the investment and governance of the transactions. Some of the main features of the network include:
- Heterogeneity- Unlike the traditional networking sites, Polkadot helps to connect to other blockchains as well. This includes private blockchains, permissionless blockchains, smart contracts, etc.
- Reach- The isolated blockchains only collect a limited amount of traffic due to limited members. However, as Polkadot allows interaction between different networks, its traction is much more.
- The responsibility of maintaining the security depends completely on the nominated-proof-of-stake. This means that the members choose the security and validators.
- Additionally, there is extra security due to multi-signature accounts. Instead of having a public key of one’s stash account to sign transactions, the public key for the controller is used.
The Polkadot cryptocurrency called DOT plays a key role in the running of the entire network. By being an owner of DOT, one has the ability to vote on network upgrades. The rewards that users with newly minted DOT get are based on the number of staking. DOT serves three key functions: governance, staking, and parachian.
Unlike other coins, Polkadot is a shared blockchain meaning it connects several different chains without sacrificing the overall security. DOT is the main token provided under the Polkadot network. All DOT holders control the use of the Treasure. As a part of the network, some of one’s rewards are diverted to the treasury. These funds are used to pay for the system’s smooth functioning. The DOT token has three primary purposes Governance, Staking, and Bonding.
DOT is available on almost all cryptocurrency exchanges. For eg. Coinbase, Binance
- Create an account: Create an account first. Opening an exchange account is easy if you cooperate with SEC’s (KYC) requirements.
- Add a payment method: Find the payment method section and select your preferred payment option.
- Make the purchase: Click the trade button and select “buy.” Choose the DOT token and enter the amount you’d like to buy.
- Complete the transaction: Select “Preview buy” and ensure the details entered are right. Go through all the steps, and you’ll have your first DOT right in your wallet.
Polkadot is used as a medium of exchange and store of value. Users can use DOT to participate in the Polkadot network along with governance, staking, and bonding. DOT Holders have voting rights for decisions like blockchain improvements through governance and network fees. Staking enables participants to earn rewards by acting as validators. Bonding enables the usage of DOT inside the network to connect diverse blockchains and use their capabilities.
To tackle the scalability issue, Polkadot uses parachains and parathreads whereas Ethereum uses sharding. Ethereum will use PoS consensus in ETH 2.0, while Polkadot utilizes NPoS.
How to Stake Ethereum?
With the recent increase in cryptocurrency investment, people have started looking at alternate options to Bitcoin. Ethereum was invented as an improved alternative. Moreover, in the last few years, it has achieved a lot of popularity for all good reasons.
There are three main reasons for this increasing popularity. Firstly, the unique feature of smart contracts. Under smart contracts, you can create self-executing contracts and decentralized agreements, which will be coded in the blockchain immediately. These contracts can be monetary agreements, coupon-paying bonds, swaps, or options contracts.
Another reason for Ethereum’s popularity is its speed. Compared to 45 minutes of Bitcoin, Ethereum takes a maximum of 10 minutes to finish the process. It is also more scalable compared to other coins. Its block times are more than the usual 10 seconds.
Thirdly, the proof-of-stake model being adopted by Ethereum replaces the miners with transaction validators. This removes the cryptographic challenges or any illegal behavior in the process. Ethereum is thus changing the proof-of-work method and is bringing in a lot of attention.
Collecting and staking 32 ETH is the minimum requirement to become a validator. Binance has its own ETH 2.0 staking function to provide everyone with an accessible way to collect Ethereum.
The function is available right on the Binance website with a few clicks. You can find the ETH 2.0 option on the Binance Earn page under Finance. You can enter the stake amount and start collecting Ethereum. The entire validator operating expenses and risk of on-chain penalties will be covered by Binance.
You are also eligible for BETH rewards based on your holdings during the process. It will be distributed on-chain to all the BETH users’ spot accounts. However, the redemption of these rewards and unstake ETH will occur once the merge is completed.
With the invention and merger of new ETH2.0, staking Ethereum coins has become a very important aspect of the network. In this process, a validator is someone who balances the public key and manages the consensus of the entire network.
To become a validator in the network, you need to stake over 32 ETH. You can use software like a validator client to act on behalf of the validator to hold and use the private key. As a validator, you need to have funds at stake so that your actions get paid.
One of the main advantages of becoming a validator is the rewards given for maintaining the consensus. The total number of rewards depends on the total number of validators in the network.
The addition of Ethereum 2.0 has brought in the opportunity to stake Ethereum for better utilization. Staking is a process of selecting validators to establish a new block.
You can stake Ethereum in multiple ways. One method is solo staking. Under this, you will have complete control of your staking platforms. Along with the sovereignty, you also get all the benefits and profits. But, the risk is not shared.
Another method is the custodial staking system, in which you can hand over your Ether deposit to a system. They will manage the entire node for you. You can keep track of your node. However, they take a cut of your rewards as a commission for their services.
The software that provides staking facilities are prysm, nimbus, Lodestar, Lighthouse and Teku.
Drawbacks of staking ethereum
Though the proof of stake mechanism to collect Ethereum looks like a lucrative proposal, it comes with some risks and drawbacks.
The main risk is when the algorithm penalizes you for not acting in favour of the network’s progress. This is called ‘slashing’. It may happen when you accidentally accept an invalid transaction or your stake falls below 16 ETH. You can even be punished when your node goes offline. In the case of a pool, if the service operating your pool goes down, your stake is at risk of losing, and recovery is impossible.
Additionally, the conversion to ETH can only occur when the ETH 2.0 project is completed; before that, no withdrawal can be made. The entire process can be only done in the long run. Until the chain and mainnet are merged, your ETH staking is useless.
Benefits of staking ethereum
Staking Ethereum is a very profitable business. It will make the entire blockchain process environment-friendly. As the requirement of resources is comparatively lower, it will attract more investors in the staking process,
Staking Ethereum also helps in passive income generation. The net annual return in staking is high. Once you have set up a node, it becomes easier to earn rewards. These rewards will help secure the network in the blockchain.
The staking process is an integral part of the ETH 2.0 revolution in the development stage. Once it starts with comprehensive practice, rewards will hold much more value.
Bringing a new revolution to the already existing Ethereum blockchain, ETH 2.0 is the newest version of the same. The new upgrade is to switch from the Proof-of-Work model to the Proof-of-Stake method.
For years, there have been two parallel blockchain mediums running for Ethereum. ETH 2 has been made to bridge the gap between the different features. This will unify the technologies making the process hassle-free and more manageable.
The main advantage of this transition is that it will make Ethereum more attractive and a better investment than Bitcoin. This merge will happen later this year.
Ethereum staking pools
Ethereum staking is the newly emerging technology in the cryptocurrency market that allows users to become a validator. However, one needs to invest 32 ETH to become a validator. Staking pools is a collaborative approach to the same. It is called a staking pool when a group of people come together to stake smaller amounts of ETH to obtain the required 32 ETH.
You can easily get the token with a low entry barrier by staking pools. But, it comes with the risk of delegating all node operations to a third party and a fee for the services. Though you can be accountable for your stakes, you are not sovereign with your choices.
One needs to remember that as the risk involved in staking and the fee charged is more, thorough research of the pool, its advantages, and disadvantages must be done before investing or depositing your ETH.
Staking Ether With Rocket Pool: Everything You Need To Know
ETH2 is an upgrade to the Ethereum network, which intends to improve the network’s security and scalability. This upgrade involves transitioning Ethereum’s mining model (Proof-of-Work) to a staking model (Proof-of-Stake), which is likely to be completed by 2023.
Following this transition, users will be able to stake their ETH holdings. Staking implies actively participating in transaction validation (just like mining). Users with the minimum necessary ETH balance can validate transactions and earn staking rewards.
Rocket Pool is an ETH staking pool that lowers financial and hardware requirements for staking this cryptocurrency. With just 32 ETH, individual users can stake Ethereum on their own node. Sometimes, the value of 32 ETH makes it unreasonable for most crypto users. Rocket Pool can be the best option to begin Ethereum staking in such scenarios. Moreover, the infrastructure and liquidity of Rocket Pool make withdrawals almost effortless with no prior technical knowledge required. In addition, RPL, the project’s native token, maintains an entirely decentralized governance process.
Rocket Pool majorly relies on smart contracts. Rocket Pool claims the crypto users as an integral part of the system. They verify transactions on the Ethereum 2.0 network. To begin the staking, a node operator must stake at least 16 ETH outside the protocol. After ETH is staked, the node can verify the transactions. In exchange for this, the node receives a reward. The amount of reward depends on the Supply and demand on the Ethereum network.
After receiving rewards, validators must wait for a certain period before they can withdraw assets and exchange them for ETH. In the long run, validators can also burn these rewards.
Furthermore, regular users can also stake Ethereum for rewards. Users must stake at least 0.01 ETH. In exchange for this, they receive rETH, which can be used for trading, lending, and collateral.
Rocket Pool also endorses Watchtower nodes. These nodes’ role is to report information to the Ethereum proof-of-work network. This information helps set the rETH/ETH exchange rate and helps validators withdraw their tokens.
Rocket Pool utilizes the Ethereum Proof-of-Work protocol. This platform supports independent node operators, Staking as Service (SaaS) providers, and pool stakes. The SaaS enables regular Ethereum holders to participate in the verification process by delegating node operations to a third party.
Pooled stakers enable Ethereum users to participate in the staking protocol with a much lower deposit requirement. A Rocket Pool user can deposit as little as 0.01 ETH and, in return, receive rETH. This also enables a node operator to create a new Beacon Chain validator.
The rate of rETH is updated daily compared to ETH. It is a dynamic exchange rate, meaning you’ll never receive the same amount of ETH as the ETH you put in. The rate depends on the Beacon Chain rewards and the staked ETH. This maintains the consensus algorithm. Users can trade rETH reward for ETH through Rocket Pool’s smart contracts.
Rocket Pool provides liquidity and rapid withdrawals and offers its infrastructure to begin staking with a minimum of 0.01 ETH. The last part is great for regular crypto users looking to stake ETH for profit or to support the ecosystem.
In addition, Rocket Pool embraces a decentralized system where RPL, the native token of the protocol, is used for governance. This allows participants to vote on issues affecting the protocol. Moreover, the staking process is simple and requires a little technical expertise.
Keeping in mind the Extreme volatility of the Crypto market, dealing with any digital assets carries an inherent risk. However, the danger of performing crypto dealings using Rocket Pool is small. This is because Rocket Pool has received endorsements from several reputable auditors such as Sigma Prime and Consensys Diligence. Therefore, the protocol is more secure and safe than other ETH staking platforms.
The procedure of staking Ethereum with Rocket Pool is very straightforward and hassle-free. Here’s how it all works:
Visit the Staking Section of Rocket Pool on the official website.
Step 2 :
Connect Your Wallet: Metamask is the most preferred by users. However, you can also use Wallet Connect, Unstoppable Domains, Frame, or Tally.
Step 3 :
Select the Right Network: While using the dropdown from your MetaMask connection, always select the correct network, i.e. “Ethereum Mainnet” and “Goerli Test Network.”
Initiate Staking: After connecting your wallet, you can start staking your ETH. The main page of Rocket Pool’s staking section enlists the necessary staking conditions to be met. Along with how much rETH you will receive, the exchange rate, and the transaction cost to be paid.
Step 5 :
Confirm the Transaction: Once you validate the transaction, you will receive your rETH. This amount will differ from the ETH you staked. The value depends on the dynamic exchange rate between the two currencies.
Step 6 :
Unstaking your ETH: Users can also unstake ETH anytime from the same dashboard. However, a 24-hour waiting period will be required. Technically, if you wait for a sufficient amount of time, the value of your rETH will increase, provided that the validators have been efficient.
Rocket Pool ETH (rETH) is the liquidity token of the protocol representing the amount of ETH deposited by each user. The value of rETH is calculated by an algorithm that considers the amount staked and the validator’s rewards. Moreover, the rETH is tradable on Uniswap and Balancer as part of pairs that include wETH.
ETH: rETH = (amount of ETH staked on ETH1 / total validator balance on ETH2)
The RPL token
RPL is the native token of Rocket Pool, issued in the governance process of the protocol. This token ensures that the system remains trustless and decentralized. As insurance, RPL can also be staked on a Rocket Pool node.
While staking RPL, users also receive an additional reward of the same token. Operators can stake over 150% of the staked ETH’s value. New RPL tokens are minted every 28 days; this period is known as a “checkpoint.”
RPL is distributed among the node operators in exchange for operating on the network. Rocket Pool claims that it purposely manages a 5% inflation rate of the RPL token.
Regular node operators that stake RPL receives 70%. The remaining 30% is split between Oracle DAO members and Protocol DAO Treasury. This offers additional incentives to operators who run essential parts of the network.
At the time of writing, RPL hosts a market cap of $434 million and a daily volume of nearly $3 million. The RPL’s price has increased proportionally to the network’s increase in popularity as a staking service.
Crypto analysts are generally optimistic about RPL’s future price valuations. Many claim it can have a value between $27-$40 at some stage in 2022.
Rocket Pool is an Ethereum staking platform that endorses decentralization. Unique to the industry, it offers an easy alternative to stake ETH as an individual node validator. Regular users can also stake with a minimum of 0.01 ETH. Node validators must stake at least 16 ETH. In exchange, they receive rETH and/or RPL as rewards. This is a good and relatively secure way of supporting the Ethereum network while improving crypto balance.
Yes, Rocket Pool allows ETH staking. In exchange, you receive rETH and RPL if you serve as a node validator of the protocol.
Several Ethereum staking services are available; one of the most popular ones is Rocket Pool. This protocol allows users to stake with a minimum of 0.01 ETH and offers rewards in the form of rETH.
Users can stake and unstake ETH at any point on Rocket Pool. They receive rETH in exchange, and the value of rETH depends on the activity of node validators. During unstaking, users must wait 24 hours for an additional security measure.
Users can run individual nodes or stake a minimum of 0.01 ETH on Rocket Pool. In exchange, they can earn protocol tokens rETH and RPL.
Yes, you can. Node validators can also stake RPL because it acts as security insurance for the network. In exchange, node operators are rewarded with additional RPL tokens.
RPL is the native utility token of Rocket Pool, a decentralized Ethereum staking protocol.
Users can mint RPL tokens every 28 days. Node operators receive these as rewards. In addition, RPL is also available on Uniswap, CoinEx, or HotBit.
The exact value of rETH is calculated based on an algorithm that considers the amount of ETH that was staked, and the rewards are given. As time passes, the provided rewards for validators increase and their value.
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