1/ There is lots of chatter on ETH staking and how the merge will benefit the ETH price
That is great, we get it, post merge ETH price likely goes up, a lot
But have you asked yourself, how best to position for the MERGE?
Here is how I have broken it down
🧵 👇
That is great, we get it, post merge ETH price likely goes up, a lot
But have you asked yourself, how best to position for the MERGE?
Here is how I have broken it down
🧵 👇
2/ Going to presume you know what the merge is and why its beneficial to the ETH price
But if not, here is the quick take:
- Staked ETH now earns 4-5% yield and consensus suggests 10-20% post merge (absent the ETH price increasing)
- ETH becomes deflationary => price goes up
But if not, here is the quick take:
- Staked ETH now earns 4-5% yield and consensus suggests 10-20% post merge (absent the ETH price increasing)
- ETH becomes deflationary => price goes up
3/ At the end of this thread, will post a few good threads on the topic
For now, assume $10k+ ETH over next 12-36 months is likely
For now, assume $10k+ ETH over next 12-36 months is likely
4/ This thread is meant to serve as a broad general overview, will touch on the details, but will try to not go too deep
Goal is to give you context and trade-offs to consider
You can then determine where to dig in and do more work
Goal is to give you context and trade-offs to consider
You can then determine where to dig in and do more work
5/ Some of this is complicated, I may have some things wrong, please correct me where I do
I’m not going to let perfect be the enemy of good enough
I’m not going to let perfect be the enemy of good enough
6/ Staking options fall into three broad categories
1. Liquid staking (“synthetics” such as Lido’s stETH or Rocket Pools rETH)
2. Centralized finance staking (“cefi staking” i.e., stake on Coinbase, Kraken, etc.)
3. Staking directly (Staked, Rocket Pool)
1. Liquid staking (“synthetics” such as Lido’s stETH or Rocket Pools rETH)
2. Centralized finance staking (“cefi staking” i.e., stake on Coinbase, Kraken, etc.)
3. Staking directly (Staked, Rocket Pool)
7/ Each category comes with trade-offs and a particular user base it is best suited for
8/ Trade-offs fall into these buckets
Post Tax Yield
- Tax Efficiency
- Fees
- Other Income
- Yield Dilution
Risk Profile
- Complexity
- Smart Contract Risk
- Regulatory Risk
- Self Custody Risk
- Anonymity
- Synthetic Peg
Other
- Defi Composability
- Decentralization Benefits
Post Tax Yield
- Tax Efficiency
- Fees
- Other Income
- Yield Dilution
Risk Profile
- Complexity
- Smart Contract Risk
- Regulatory Risk
- Self Custody Risk
- Anonymity
- Synthetic Peg
Other
- Defi Composability
- Decentralization Benefits
9/ Staking trade-offs are complex 😬
Here is how we will break it down
Here is how we will break it down
10/ Don’t be overwhelmed…
TLDR:
- Best Return is likely either a tax advantaged synthetic like wstETH or rETH, staking with Rocket Pool, or Yield Farm with wstETH/rETH
- Best Risk Adjusted Return is likely either a synthetic (wstETH or rETH) or staking with Rocket Pool
TLDR:
- Best Return is likely either a tax advantaged synthetic like wstETH or rETH, staking with Rocket Pool, or Yield Farm with wstETH/rETH
- Best Risk Adjusted Return is likely either a synthetic (wstETH or rETH) or staking with Rocket Pool
11/ TLDR Continued
- The more you use defi the more you should favor a synthetic
- Everyone, that can afford to to do so, should stake and be part of securing the future
Let’s break it down piece by piece
- The more you use defi the more you should favor a synthetic
- Everyone, that can afford to to do so, should stake and be part of securing the future
Let’s break it down piece by piece
12/ First, let’s rule out Centralized Staking (cefi)
Cefi has the lowest yield of all options, if you are on CT, cefi staking is most likely not for you
You are looking for the best risk adjusted returns, right anon?
Cefi has the lowest yield of all options, if you are on CT, cefi staking is most likely not for you
You are looking for the best risk adjusted returns, right anon?
13/ Cefi will get you 10-15% less yield than any other option and is tax inefficient
Nothing wrong with cefi staking, it has its place, but its for folks who don’t know any better and that’s probably not you
Nothing wrong with cefi staking, it has its place, but its for folks who don’t know any better and that’s probably not you
14/ Let’s move to Taxes (keeping in mind I’m not a tax expert and this is not tax advice)
When it comes to staking, taxes are one of the biggest determinants in what option is best for you
Do you have ETH with big built-in capital gains? Stake it
When it comes to staking, taxes are one of the biggest determinants in what option is best for you
Do you have ETH with big built-in capital gains? Stake it
15/ Any of the options other than cefi or direct staking will result in a tax bill
When ETH is converted to a synthetic it is a taxable event
When ETH is staked it is not a taxable event (NOT tax advice)
When ETH is converted to a synthetic it is a taxable event
When ETH is staked it is not a taxable event (NOT tax advice)
16/ If you are deep in capital gains territory then staking is the only option that makes sense
Why pay 30-50% in taxes to pick up a similar yield you can get while deferring taxes?
Why pay 30-50% in taxes to pick up a similar yield you can get while deferring taxes?
17/ Even if you are not deep in capital gains territory… if the yield is 10%, it’s hard to overcome taxes on a 20% gain vs. a comparable alternative with deferred taxes
18/ So what about ETH you just acquired and has zero gains?
wstETH and rETH compound staking rewards… the yield compounds overtime, meaning the ETH value of 1 wstETH or 1 rETH goes up overtime
wstETH and rETH compound staking rewards… the yield compounds overtime, meaning the ETH value of 1 wstETH or 1 rETH goes up overtime
19/ stETH yield is treated like a dividend (it’s a rebasing token meaning your stETH balance in units increases over time)
Yield from staking is treated like a dividend
Yield from staking is treated like a dividend
20/ Dividends are taxed, meaning on a post tax basis you are compounding inefficiently
The longer you stake, the bigger the drag
The longer you stake, the bigger the drag
21/ Great, so what is best?
If you want to hold and not touch your staked ETH bag for the next +10 years… all else equal, a synthetic that compounds tax efficiently is best (wstETH or rETH)
If you want to hold and not touch your staked ETH bag for the next +10 years… all else equal, a synthetic that compounds tax efficiently is best (wstETH or rETH)
22/ If you want to enjoy the cash flow to live/re-invest elsewhere, staking can make a lot of sense
23/ Staking is not free of fees… (unless you get paid to stake [wink])
Fees you pay
- stETH and wstETH 10% of yield
- rETH 15% of yield
- Centralized staking 20-25% of yield
- Staked $19/month (great deal, expect eventual price increases)
Fees you pay
- stETH and wstETH 10% of yield
- rETH 15% of yield
- Centralized staking 20-25% of yield
- Staked $19/month (great deal, expect eventual price increases)
24/ Fees you pay continued
- Rocket Pool… you get paid a 15% fee to stake [mind blown] - more later
- Yield Farms… you get paid and can 1.5-2x the yield from a synthetic (trading fees + token emissions)
- Rocket Pool… you get paid a 15% fee to stake [mind blown] - more later
- Yield Farms… you get paid and can 1.5-2x the yield from a synthetic (trading fees + token emissions)
25/ What is Other Income?
Rocket Pool operates on mini nodes, you stake 16 ETH + 1.6 RPL tokes (10% collateral) and the protocol adds 16 ETH to be staked alongside your 16 ETH (you can stake with 16 ETH and not put up the full 32 ETH)
Rocket Pool operates on mini nodes, you stake 16 ETH + 1.6 RPL tokes (10% collateral) and the protocol adds 16 ETH to be staked alongside your 16 ETH (you can stake with 16 ETH and not put up the full 32 ETH)
26/ You get paid 15% of the yield generated from the 16 ETH staked along side your 16 ETH… you get 15% more ETH yield than any other staking option
Paid to stake sounds pretty good… but that is not all
Paid to stake sounds pretty good… but that is not all
27/ You also earn your pro rata share of RPL emissions
RPL emissions can add 1-4% to your yield
But this chance for higher yield comes with additional risk
RPL emissions can add 1-4% to your yield
But this chance for higher yield comes with additional risk
28/ What is this risk?
To earn the fees + emissions you need to post at least 10% collateral in the form of RPL tokens
If your collateral value goes below 10% you do not receive RPL emissions
RPL is used as collateral so any slashings get reduced from a nodes collateral
To earn the fees + emissions you need to post at least 10% collateral in the form of RPL tokens
If your collateral value goes below 10% you do not receive RPL emissions
RPL is used as collateral so any slashings get reduced from a nodes collateral
29/ This collateral means that rETH, the Rocket Pool synthetic staked eth, is slash protected (better protected than stETH)
But it also means Rocket Pool staking has a unique risk
But it also means Rocket Pool staking has a unique risk
30/ What is this RPL token?
RPL is used to compensate the Rocket Pool developers who continue to build the protocol
RPL is used to align incentives so that nodes can be decentralized… there is no gate keeper saying who can and cannot be node
RPL is used to compensate the Rocket Pool developers who continue to build the protocol
RPL is used to align incentives so that nodes can be decentralized… there is no gate keeper saying who can and cannot be node
31/ Therefore Rocket Pool over-collateralizes nodes… each node is 32 ETH and at least 1.6 ETH worth of RPL
32/ The RPL token has been very stable vs. ETH
If demand for Rocket Pool nodes increases relative to RPL emissions, token value goes up
Rough math indicates ~300 nodes added each month fully consumes RPL emissions at the current emissions rate (which declines over time)
If demand for Rocket Pool nodes increases relative to RPL emissions, token value goes up
Rough math indicates ~300 nodes added each month fully consumes RPL emissions at the current emissions rate (which declines over time)
33/ If Rocket Pool gains staking market share (it has been), once RPL emissions decline, it is possible RPL increases relative to ETH
Staking with Rocket Pool is a bet that Rocket Pool will be successful and relevant in the future
Staking with Rocket Pool is a bet that Rocket Pool will be successful and relevant in the future
34/ Since staking with Rocket Pool gets you the 15% commission on the ETH staked along side you, this more than compensates you if your RPL collateral goes to zero
You do not have to add collateral… adding collateral to stay above 10% only matters if you want RPL emissions
You do not have to add collateral… adding collateral to stay above 10% only matters if you want RPL emissions
35/ In a worst case scenario think of Rocket Pool as paying a 10% load to earn 15% more yield… still a good deal
36/ For folks familiar with Lido’s LDO token, RPL is similar, its a token that benefits from Rocket Pool ecosystem growth
LDO may ultimately earn a % of Lido staking revenues
RPL benefits from the demand for node collateral
LDO may ultimately earn a % of Lido staking revenues
RPL benefits from the demand for node collateral
37/ On to Yield Dilution, what’s that?
Yield dilution is when synthetic staked ETH is issued, that earns a yield, but there is no more ETH actually being staked
For every stETH there is one ETH… but some of the ETH is in the queue waiting to be staked
Yield dilution is when synthetic staked ETH is issued, that earns a yield, but there is no more ETH actually being staked
For every stETH there is one ETH… but some of the ETH is in the queue waiting to be staked
38/ Today the ETH queue is more than two weeks long
Only 225 validators (nodes staking 32 ETH) can be onboarded per day… as demand goes up, the queue gets longer
The queue is expected by some to become months long
Only 225 validators (nodes staking 32 ETH) can be onboarded per day… as demand goes up, the queue gets longer
The queue is expected by some to become months long
39/ So why does the queue matter?
Right now you can deposit ETH to mint stETH but that ETH will not be producing yield till it gets through the queue
The queue could get really long… and hence you can have your yield diluted
Right now you can deposit ETH to mint stETH but that ETH will not be producing yield till it gets through the queue
The queue could get really long… and hence you can have your yield diluted
40/ Lido, the governance token for stETH, could vote to pause minting new stETH but that seems unlikely
Lido takes a cut of all the yield generated and its unlikely they turn away customers… the market forces will have to do this for them
Lido takes a cut of all the yield generated and its unlikely they turn away customers… the market forces will have to do this for them
41/ If the yield is diluted too much, folks will choose alternatives that capture the yield, but alternatives are limited
42/ One of these alternatives is Rocket Pool’s rETH
rETH works a bit differently
rETH can be minted but there is a queue that can only be 2,000 ETH long
rETH works a bit differently
rETH can be minted but there is a queue that can only be 2,000 ETH long
43/ Each time a Rocket Pool node spins up 16 ETH is pulled from the queue to match the node owners 16 ETH
What this means is that you can’t endlessly mint rETH… there can only be a queue 2,000 ETH long… dilution has a cap
What this means is that you can’t endlessly mint rETH… there can only be a queue 2,000 ETH long… dilution has a cap
44/ rETH has demonstrated when it is in demand it can trade at a premium
Earlier this past month rETH traded to a strong ~5% premium post the launch of a Curve LP pool (wstETH/rETH)
Demand for rETH exceeded the ability to mint new ETH
Earlier this past month rETH traded to a strong ~5% premium post the launch of a Curve LP pool (wstETH/rETH)
Demand for rETH exceeded the ability to mint new ETH
45/ If rETH could be minted at will, this would be quickly arbitraged away, this is a sign of times to come
stETH can be minted at will by depositing ETH, so stETH should theoretically never trade to a premium
stETH can be minted at will by depositing ETH, so stETH should theoretically never trade to a premium
46/ stETH has a slight fee advantage vs. rETH but rETH has a yield dilution cap
rETH also benefits from RPL collateral which covers rETH holders vs. slashings
Simplistically one may think of these as off-settting each other
In this case, the post tax yield would be similar
rETH also benefits from RPL collateral which covers rETH holders vs. slashings
Simplistically one may think of these as off-settting each other
In this case, the post tax yield would be similar
47/ There is however a merge uber bull case that results in rETH accreting value that exceeds wstETH such that the 5% fee differential is more than made up
48/ My expectation is rETH trades to a very strong premium post merge and that the premium sustains, for however long the validator queue lasts, more than offsetting the 5% fee differential
49/ 27/ The post tax yield on Rocket Pool vs. Staked
Rocket Pool will beat Staked given the 15% commission earned from the ETH staked along-side you + the RPL emissions
Rocket Pool will beat Staked given the 15% commission earned from the ETH staked along-side you + the RPL emissions
50/ This assumes the RPL/ETH ratio is at least static, if the ratio increases, Rocket Pool nodes will post lights out returns
51/ This brings us to yield farming
The king LP has been stETH/ETH which has a +$4.5 billion TVL on Curve
You earn the yield from stETH but not yield from ETH
The king LP has been stETH/ETH which has a +$4.5 billion TVL on Curve
You earn the yield from stETH but not yield from ETH
52/ In exchange you get trading fees + emissions from Curve + if you stake your LP at Convex you get additional CVX and CRV rewards
stETH/ETH LP tends to get you 150% of the stETH yield… but its not tax efficient (short term gains and ordinary income)
stETH/ETH LP tends to get you 150% of the stETH yield… but its not tax efficient (short term gains and ordinary income)
53/ The wstETH/rETH LP was recently added to Curve
Rocket Pool is working to get rETH increased defi composability and to do this they need to deepen rETH liquidity
The wstETH/rETH LP on Curve enables rETH to bootstrap using stETH liquidity which is incredibly deep
Rocket Pool is working to get rETH increased defi composability and to do this they need to deepen rETH liquidity
The wstETH/rETH LP on Curve enables rETH to bootstrap using stETH liquidity which is incredibly deep
54/ This is great for Rocket Pool, rETH holders, and all of defi
55/ This is a great LP because both sides earn yield vs. only one with the stETH/ETH LP
Using this LP and staking it on Convex can get you 2-2.5x the straight stETH yield
Using this LP and staking it on Convex can get you 2-2.5x the straight stETH yield
56/ To summarize the post tax yield discussion
- wstETH and rETH are superior to stETH (due to tax efficiency)
- Rocket Pool is superior to Staked (due to being paid to stake)
- wstETH/rETH LP is superior to stETH/ETH LP (due to sides of yield)
- wstETH and rETH are superior to stETH (due to tax efficiency)
- Rocket Pool is superior to Staked (due to being paid to stake)
- wstETH/rETH LP is superior to stETH/ETH LP (due to sides of yield)
57/ But each of the category winners is somewhat comparable to other category winners absent tax considerations
Again, this is why tax considerations is so important
Again, this is why tax considerations is so important
58/ Risks and lots of trade-offs
stETH and wstETH are comparable except for the added risk of wstETH being held in a multi-sig
wstETH is a token that has a claim to a pool of stETH that is held in a smart contract which has multi-sig owners
stETH and wstETH are comparable except for the added risk of wstETH being held in a multi-sig
wstETH is a token that has a claim to a pool of stETH that is held in a smart contract which has multi-sig owners
59/ For big bags, this is something to be aware of (incremental risk vs. stETH)
60/ rETH has more smart contract risk than does stETH or wstETH
rETH is a by product of Rocket Pool which is rather complex given its a decentralized staking service
More on this below
rETH is a by product of Rocket Pool which is rather complex given its a decentralized staking service
61/ When it comes to staking, Staked is a lot less risky than is Rocket Pool
Staked is pure staking and is owned by Kraken
It’s a great product, run by a great business
Simple, clean, if you want to stake in the simplest possible way, Staked is probably the best option for you
Staked is pure staking and is owned by Kraken
It’s a great product, run by a great business
Simple, clean, if you want to stake in the simplest possible way, Staked is probably the best option for you
62/ Rocket Pool is decentralized staking and is more akin to an open source protocol than a product
To be decentralized the protocol has to run on smart contracts and it is complex
To be decentralized the protocol has to run on smart contracts and it is complex
63/ The design of Rocket Pool is elegant and incredibly well done but its attack/error surface area is larger than is Staked
64/ Yield farms come with known smart contract risks
Though being LPs on Curve greatly diminishes this risk given it is a time tested protocol
wstETH/rETH LP is more risky as it combines two protocols vs. only one for stETH/ETH
Though being LPs on Curve greatly diminishes this risk given it is a time tested protocol
wstETH/rETH LP is more risky as it combines two protocols vs. only one for stETH/ETH
65/ This is something to consider as you balance risk and reward
66/ Regulations are ever changing
stETH, wstETH, rETH may one day be deemed to be securities
Rocket Pool nodes have 16 ETH from the node owner + 16 ETH that is put alongside them where they earn a commission
stETH, wstETH, rETH may one day be deemed to be securities
Rocket Pool nodes have 16 ETH from the node owner + 16 ETH that is put alongside them where they earn a commission
67/ If rETH is alleged to be a security, who issued it? The decentralized protocol, each individual node owner, someone else?
68/ Going through the mechanics, I do not believe Rocket Pool node owners are issuing rETH, the rETH was minted the moment it hit the queue which happens before the node owner receives the matched ETH)
But regulation is tricky and is not always educated or logical
But regulation is tricky and is not always educated or logical
69/ Staked is very clean on the regulatory front
So long as nodes are not required to KYC addresses for transactions processed etc.
Know your customer rules, if applied to staking, are problematic for any derivative of staking and all of defi
So long as nodes are not required to KYC addresses for transactions processed etc.
Know your customer rules, if applied to staking, are problematic for any derivative of staking and all of defi
70/ This is a crux of a bear thesis, if you believe this happens, sell all your crypto and buy more Bitcoin
Let’s hope for the best on this front
Let’s hope for the best on this front
71/ Self custody… this should be a primary concern for big bags
What do I mean by self custody?
The ability to hold the asset in a hardware wallet and preferably a multi-sig such as gnosis safe
What do I mean by self custody?
The ability to hold the asset in a hardware wallet and preferably a multi-sig such as gnosis safe
72/ Imagine ETH prices 10x, do you really want that value on an exchange or one single hardware device
Synthetics are all ERC20 tokens and can be held in a gnosis safe, as can LP positions, this is a big plus
Synthetics are all ERC20 tokens and can be held in a gnosis safe, as can LP positions, this is a big plus
73/ I am unaware of any staking option that allows you to use a multi-sig set up
Staked uses a ETH2 Key… meaning you create a brand new private key to access your ETH on L2
One more key to keep secure
Staked uses a ETH2 Key… meaning you create a brand new private key to access your ETH on L2
One more key to keep secure
74/ Rocket Pool works a bit differently, Rocket Pool can use a hardware device like a Ledger or Trezor
Rocket Pool doesn’t have you touch L2 so you can use your L1 address (there is a smart contract that governs where any withdrawal is sent)
Rocket Pool doesn’t have you touch L2 so you can use your L1 address (there is a smart contract that governs where any withdrawal is sent)
75/ Rocket Pool also has two different addresses, a node owner than initiates withdrawals, and then you can set a separate withdrawal key (or it can be the same owner key)
Rocket Pool effectively can be set up to be either a 1 of 1 or 2 of 2 key system
Rocket Pool effectively can be set up to be either a 1 of 1 or 2 of 2 key system
76/ Using the withdrawal key you can mimic a multi-sig setup for Rocket Pool
You can use Shamirs Secret and create a 3 of 5 seed and wipe the hardware device for the withdrawal address
This effectively creates a multi-sig for the address that the node can withdraw it’s ETH
You can use Shamirs Secret and create a 3 of 5 seed and wipe the hardware device for the withdrawal address
This effectively creates a multi-sig for the address that the node can withdraw it’s ETH
77/ Shamirs Secret is advanced, comes with unique risks, and should be read up on extensively before implementing
78/ Anonymity is always important in crypto
Synthetics, Rocket Pool, and Yield Farms all benefit from no need to KYC to benefit from staking
Cefi + Staked require various levels of personal information disclosure
Synthetics, Rocket Pool, and Yield Farms all benefit from no need to KYC to benefit from staking
Cefi + Staked require various levels of personal information disclosure
79/ Information disclosure is most concerning if you cannot use a multi-sig
Assume all databases are hacked and your information becomes public
Assume all databases are hacked and your information becomes public
80/ All tokenized synthetic forms for staked ETH have the risk of going off peg
Until ETH can be withdrawn from validators, ~six months post merge, you are reliant on a peg to have a pathway back to holding ETH
Until ETH can be withdrawn from validators, ~six months post merge, you are reliant on a peg to have a pathway back to holding ETH
81/ If you plan to be a long-term ETH stoker this should not be particularly high on your concerns list
Just know it’s a risk and is alleviated once ETH can be withdrawn from validators
Just know it’s a risk and is alleviated once ETH can be withdrawn from validators
82/ What about Decentralization?
A key concern for staking is centralization
There are very good threads, filled with very educated, yet different views on the topic
Broadly speaking, stETH (Lido), Kraken (who owns Staked), and Coinbase are market leaders in staking
A key concern for staking is centralization
There are very good threads, filled with very educated, yet different views on the topic
Broadly speaking, stETH (Lido), Kraken (who owns Staked), and Coinbase are market leaders in staking
83/ At the current pace of adoption there is a risk of centralization
Many believe Lido is on its wya to becoming a staking monopoly
Lido is set-up to address this but I’m not concerned with where we are now, I’m concerned with where we may be in 5-10 years
Many believe Lido is on its wya to becoming a staking monopoly
Lido is set-up to address this but I’m not concerned with where we are now, I’m concerned with where we may be in 5-10 years
84/ It makes sense to ensure a decentralized future or it won’t be defi, right?
85/ If you don’t believe in decentralization please leave crypto
Since you do believe in decentralization, how about a tie goes to the most decentralized solution
Rocket Pool is decentralized with +5k nodes, run by +1k different node owners, staking +165k ETH
Since you do believe in decentralization, how about a tie goes to the most decentralized solution
Rocket Pool is decentralized with +5k nodes, run by +1k different node owners, staking +165k ETH
86/ Rocket Pool currently has 1-2% staking market share
Rocket Pool is becoming a protocol as can be seen by services such as Allnodes building on top of Rocket Pool
Rocket Pool is becoming a protocol as can be seen by services such as Allnodes building on top of Rocket Pool
87/ Allnodes offers a cloud hosted service where you can sign up and have them run your Rocket Pool node for $10-20 per month
Other services like Allnodes exist and others are being built
Rocket Pool is good for Ethereum decentralization
Other services like Allnodes exist and others are being built
Rocket Pool is good for Ethereum decentralization
88/ Last but not least is Defi Composability
Synthetics and stETH and wstETH in particular are very useful in defi
Want to borrow against your synthetic ETH position and avoid triggering capital gains? Synthetics enable this
Synthetics and stETH and wstETH in particular are very useful in defi
Want to borrow against your synthetic ETH position and avoid triggering capital gains? Synthetics enable this
89/ rETH is working hard to be more pervasive in defi and will likely follow in stETH’s footsteps and become quite composable
90/ One strategy folks are employing is to borrow against stETH on AAVE, borrow ETH, and rinse repeat
This is a carry trade whose primary risk is the stETH to ETH peg
If you are a heavy defi user, synthetics provide valuable optionality
This is a carry trade whose primary risk is the stETH to ETH peg
If you are a heavy defi user, synthetics provide valuable optionality
91/ A consideration that has not been discussed and is something I’m still pondering…
Is there a scenario where the native asset ETH is actually the most valuable
Native assets are often more valuable than synthetics
Is there a scenario where the native asset ETH is actually the most valuable
Native assets are often more valuable than synthetics
92/ If ETH becomes scarce relative to synthetics 🤔
This is favorable optionality when staking ETH
This is favorable optionality when staking ETH
93/ It should be noted that staking ETH is a one way door
If the merge never happens, you lose your ETH
If you bought a synthetic, you can possibly swap to ETH before the exit is closed
If the merge never happens, you lose your ETH
If you bought a synthetic, you can possibly swap to ETH before the exit is closed
94/ A bet on staking is a bet on the merge occurring, particularly so if you want to stake a node
95/ When it comes to staking, there is a lot to consider
From my vantage point, there is no obvious best choice
The best choice very much depends on your personal situation and even then it is not entirely clear
From my vantage point, there is no obvious best choice
The best choice very much depends on your personal situation and even then it is not entirely clear
96/ When there is no best choice, often it is best to minimize the error, and consider choosing decentralization and the best from each category
Example options to consider
Sophisticated:
wstETH 33%
rETH/wstETH Curve LP staked on Convex 33%
Rocket Pool 33%
Example options to consider
Sophisticated:
wstETH 33%
rETH/wstETH Curve LP staked on Convex 33%
Rocket Pool 33%
97/ Middle Ground A:
wstETH 50%
Rocket Pool 50%
Middle Ground B:
wstETH 50%
rETH 17%
Rocket Pool 33%
Simple:
wstETH or rETH 50%
Staked 50%
wstETH 50%
Rocket Pool 50%
Middle Ground B:
wstETH 50%
rETH 17%
Rocket Pool 33%
Simple:
wstETH or rETH 50%
Staked 50%
98/ Hopefully this thread has helped you better understand things to consider and how the various options compare on various key criteria
I’m also hoping that discussion this thread spurs helps me think about my own personal choice, I’m still contemplating what is best for me
I’m also hoping that discussion this thread spurs helps me think about my own personal choice, I’m still contemplating what is best for me
99/ You have read this far, you must have enjoyed the thread, please like and retweet, it means a lot to me
100/ Below are additional resources to continue your learning
You know I don’t like to provide all the answers
And this thread has to have an ending and get posted
You know I don’t like to provide all the answers
And this thread has to have an ending and get posted
105/ rETH/wstETH LP
106/ LDO Thesis
Levered steth strategy
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