Staking ETH since 2020! Worth it?

By Thalers-r | Crypto Curious | 24 Jul 2022


As the Merge, the most significant upgrade in Ethereum Network yet is approaching day by day, the total amount of ETH staked and locked in Beacon Chain keeps increasing. Since the day Beacon Chain went online on December 1st 2022, Ethereum 2.0 validators have been earning rewards on the network.

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In order to be a validator and earn rewards, one needs to run a node with a wallet staking at least 32 ETH. And yes, it is quite a sum of money for most people. Besides that, a decent computer and a broadband internet connection with virtually continual uptime are required. Or a VPS with monthly costs…

There is another option: 3rd party providers.

There are some 3rd party providers that you can send your ETH and they stake them for you. You do not need to have at least 32 ETH. These providers, acting as a pool, let you stake as low as 0.0001 ETH. Their terms change one to another of course. Some ignore the slashing cuts and pay like slashing never occurred whereas some don't, some cut a percentage as infrastructural cost and some cover all costs and pay in full. Here is an overview of some exchanges where you can stake your ETH.

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As you can see in the chart above the more ETH staked lesser the rewards will be. But keep in mind that, where the amount of staked ETH rising, the amount of ETH in circulation decreases. If you were to use a VPS service and the price of ETH is not high enough, you would end up having negative returns by running a validator node.

Let's assume we started staking at the beginning (December 1st 2020) and used a staking provider with 0% cuts and fees. So we are assuming zero infrastructural costs, only rewards. 1 ETH varied between $560-635 on December 1st. Let's say we purchased 32ETH at an average price of $600 apiece. $19,200 in and started staking with a 21% APR would have earned you ~2.61ETH. And you would have a sum of ~34.61ETH which is approximately worth $54,753 at the time of the writing (1ETH=$1582).

~2.61 ETH in ~19.77 months is approximately 4.95% APY for ETH we staked. If you were to invest in ETH staking in December 2020, you would have nearly tripled your money in about 20 months. (Remember that we assumed that we have zero infrastructural costs and zero network fees.) Would it be a good investment? It is yours to decide. 


Thank you for reading. I hope, you enjoyed it and/or it helped you somehow.
Have a nice day :)

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Thalers-r
Thalers-r

Statistician, crypto enthusiast, amateur photographer.


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