Rise of staking economy: New opportunities for Ethereum 2.0

Ethereum 2.0's staking mechanism has spawned a booming staking economy and brought multiple opportunities to investors, project parties and the entire industry. For investors, Staking provides diversified sources of income, including direct staking rewards and additional benefits obtained through derivative assets such as stETH, and enables them to participate in network governance to diversify asset allocation. Project parties benefit from increased fund pools and liquidity, as well as the resulting more cooperation and innovation opportunities. From the perspective of industry development, the staking economy has promoted the progress of decentralized finance, attracted more participants to enter, and promoted the maturity and development of the industry.

The rise of the staking economy brought by Ethereum 2.0 contains new opportunities in many aspects, as follows:

Investor's perspective

• Diverent gains
  • Direct staking returns: Investors can receive certain staking rewards by pledging ETH as verifiers or entrusting them to verifiers. The annualized rate of return in the early stages of Ethereum 2.0 development was as high as 21.6%. Although it has dropped to about 3.5%, it can still bring stable passive income to long-term investors1.
  • Derived income opportunities: Lido and other liquid staking platforms allow users to pledge ETH and generate derivative assets, such as stETH. These derivative assets can be used on other DeFi platforms, such as providing liquidity on platforms such as Curve.finance to obtain additional benefits.
• Participate in network governance and ecological construction 1: Become a validator to participate in staking, be able to participate in the governance and maintenance of the Ethereum network, and have a certain influence on the development direction of the network. This helps investors gain long-term benefits from ecological development, promote the prosperity of the Ethereum ecosystem, and enhance the value of ETH.
• New choice of asset allocation: It provides crypto asset investors with a new way of asset allocation and enriches the investment portfolio. Compared with other crypto investment methods, Staking has relatively stable returns characteristics. When the market fluctuates greatly, it can be used as a relatively stable investment strategy to balance the risks and returns of the investment portfolio.

Project side perspective

• Fund pool and liquidity increase: The staking economy has attracted more users to pledge ETH, increased the scale of the fund pool of public chain projects, and provided more financial support for the development and operation of the project.At the same time, the emergence of staking derivatives, such as stETH, has also increased the liquidity of the market, making the flow of funds between different projects and applications more convenient, and promoting the development of the entire DeFi ecosystem.
• There are more opportunities for cooperation and innovation: The development of staking has promoted closer cooperation among project parties. For example, the cooperation between Lido and DeFi platforms such as Curve provides users with more profit opportunities and application scenarios. At the same time, it has also stimulated innovation from the project party and promoted the emergence of new staking models, derivatives and applications, such as decentralized staking pools, staking-based lending agreements, etc.

Industry Development Angle

• Promote the development of decentralized finance: The staking economy of Ethereum 2.0 has further promoted the development of decentralized finance, making financial services more open, transparent and accessible. It lowers the threshold for financial services, allows more users to participate in financial activities, and promotes the inclusiveness of finance. At the same time, it also provides reference and reference for other public chains and projects, and promotes the continuous improvement of the decentralized financial ecosystem of the entire blockchain industry.
• Adtraction of more participants into the industry: The rise of the staking economy has brought new vitality and appeal to the cryptocurrency industry, attracting more investors, developers and project parties to enter the Ethereum ecosystem. This will help expand the scale and influence of the industry, accelerate the application and promotion of blockchain technology, and promote the industry to develop in a more mature and diversified direction.

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