Cryptocurrency wallet provider MetaMask has introduced a new staking service that allows Ethereum users to run their own validator node… for a fee.
On January 18, the cryptocurrency wallet provider introduced stake validator via MetaMask Portfolio.
MetaMask will run a validator node on behalf of stakers who contribute 32 Ether (ETH). At current Ethereum prices, this amounts to approximately $78,752—no small amount.
It notes that no pool or hardware is required: “We securely manage your node, optimizing your staking rewards while reducing the risks of attrition and downtime.”
Introducing Validator Staking on MetaMask Portfolio.
With a 32 ETH deposit, we run your very own validator node where you're always in control.
No pooling. No hardware. Just rewards.✔️
— MetaMask (@MetaMask) January 18, 2024
The new service could be tempting for newbies and/or decentralists, as staking through MetaMask could solve centralization issues from large liquid staking providers such as Lido.
This also eliminates the need to purchase hardware to run a personal Ethereum node and eliminates the possibility of shutdowns due to internet outages.
Consensys, which operates the service, “has never received any harsh penalties in over two years of operation, despite managing over $2 billion worth of ETH through over 33,000 validators,” the company said.
Staking through MetaMask currently yields 3.8% APY, however the platform also charges a 10% fee on validator rewards.
Crypto portfolio tracker Rotkiapp founder Lefteris Karapetsas said the new service is “an interesting idea, but the 10% fee makes it a completely unattractive option for any user who bothers to compare it to other available options.”
Related: MetaMask Launches Feature to Sell ETH for Fiat
The return on staking with MetaMask minus commissions is similar to that offered by Lido, at 3.4%.
Lido is the industry's dominant liquid staking platform, currently hosting 9.3 million ETH worth $22.9 billion. According to Ultrasound. Money, this corresponds to approximately 40% of the total bet amount of 28.8 million ETH. About a quarter of the total amount of Ethereum in circulation is locked in staking.
Apart from decentralized staking providers, Ethereum holders can also use centralized exchanges like Coinbase, which take a whopping 25% share of staking rewards.