Cryptocurrency wallet company MetaMask has launched its staking service, allowing users to pool their funds and stake their assets in enterprise validators run by blockchain software company Consensys.
Through the service, MetaMask wallet users can stake Ethereum (ETH) without having to meet Ethereum’s minimum requirement of 32 ETH, which equates to approximately $112,000 at the time of writing.
By using MetaMask’s staking pool, users can save less than the required amount of ETH and will still be eligible for staking rewards to secure the network.
What is ETH staking?
Since Ethereum moved to a Proof of Stake (PoS) consensus mechanism, it has also moved from a mining model to a staking model. This means that the network needs validators to process transactions, store data, and add blocks to the beacon chain.
Essentially, validators keep the network secure and decentralized. Mathieu Saint-Olive, senior product manager at Consensys, believes that MetaMask’s mass staking service contributes to the decentralization and security of Ethereum. St. Olive told Cointelegraph:
“Having more accumulated users and more ETH is good for the security of Ethereum (…) The underlying validation infrastructure is also distributed across multiple cloud providers, multiple world regions, multiple consensus clients and multiple implementation clients.”
Validators receive interest on their coins in exchange for their active participation in Ethereum. However, staked Ethereum can also be lost if a validator fails to do its job or engages in collusion, a situation known as “cutting.”
“If the validator is broken, users could lose money, which is the main risk of staking,” explained St. Olive. However, the Consensys CEO claimed that since 2020, its validation processes have run smoothly “without any interruption.”
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99% of ETH holders do not have 32 ETH
Although the benefits of staking can be huge, not everyone can meet the minimum requirement of 32 ETH.
With the price of ETH surpassing $3,000, the requirements to become a validator have become expensive. Currently, Ethereum is hovering around the $3,500 level. This means that it takes around $112,000 to participate in staking on Ethereum.
However, not everyone has the means to participate. Citing blockchain data, the MetaMask team highlighted that “99% of Ethereum holders have less than 32 ETH.”
Additionally, the wallet service provider noted that 74% of ETH is currently unstaked and much of the accumulated ETH is concentrated in a few larger pools.
For this reason, the wallet provider’s new service aims to fill the gap for users whose assets fall below the minimum requirements. Users with less than 32 ETH can participate in signing on the network via Consensys validators.
Additionally, their assets could be “charge-free at all times,” depending on the validators’ output queuing protocols.
In a previous interview with Cointelegraph, Joseph Lubin, CEO of ConsenSys and co-founder of Ethereum, compared the new service to liquid staking and said it could be more convenient.
“You could flip a switch and you would be able to, very smoothly, allocate small or large amounts of ether and withdraw them very quickly,” Lubin said.
Not yet available in the UK or US
Although the service seems suitable for ETH holders, it is not yet available for users in the US and UK. However, MetaMask stressed that it is working on making the service available in these jurisdictions soon.
St. Olive said the U.S. regulatory landscape continues to “evolve significantly” in Ethereum staking policy. According to the executive, they plan to roll out the product in the United States once political progress takes shape.
Likewise, the executive highlighted that regulators plan to issue additional regulatory guidance in the UK. St Olive told Cointelegraph that they expected the UK to “modernize the current system and bring greater clarity to the mortgage market.”
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