ETH 2.0 Liquid Staking: Low-Risk ETH Staking for High Yields

When Ethereum (ETH) transitioned its consensus mechanism from proof of work (PoW) to proof of stake (PoS) following The Merge in September 2022, many crypto enthusiasts welcomed the change due to the numerous benefits a PoS system brings to the blockchain, such as greater scalability and higher energy efficiency. 

The shift to PoS also meant that rewards are to be given to stakers instead of miners, simplifying the block validation process and allowing for greater decentralization. However, the barrier to entry for becoming a staker remains high, as one needs to stake at least 32 ETH (equivalent to $99,401 as of Apr 27, 2024) to become a validator and earn passive income while helping to secure the network.

To address this challenge, liquid staking services were developed that support staking a marginal amount of ETH to earn rewards while being able to use the liquid staking derivatives (LSDs) for other trading opportunities. While many decentralized finance (DeFi) protocols, such as Lido DAO and Rocket Pool, offer liquid staking services, Bybit’s ETH 2.0 Liquid Staking further simplifies staking by helping you with the LSD minting process. 

Key Takeaways:

1. Bybit’s ETH 2.0 Liquid Staking allows users to stake as little as 0.01 ETH and to earn daily rewards.

2. You can choose to stake ETH to receive stETH, a liquid staking derivatives token (LSD) from Lido, or mETH, a LSD from Mantle.

3. With Bybit, you can use stETH or mETH as collateral for trading, yield farming or providing liquidity in DeFi protocols, maximizing returns while your ETH remains staked.

What Is ETH 2.0 Liquid Staking?

EETH 2.0 Liquid Staking is a staking solution that allows its users to stake as little as 0.01 ETH to earn APR rewards of up to 6%. When your ETH is staked, a liquid staking derivatives token, stETH, or mETH, is automatically minted at a 1:1 ratio. Once your ETH is converted into stETH, you’ll start earning daily yields, based on the amount of stETH held in your Bybit account. 

Although the yield from liquid staking may not be as high as that compared to directly staking ETH, you can profit in other ways, thanks to the stETH or mETH you’ve received from staking ETH. Since stETH or mETH are tokenized versions of ETH, their uses are similar to those of ETH. This means you can use stETH and mETH for trading with Bybit as well as in DeFi protocols, even though your ETH is locked for staking. You can also redeem stETH and mETH for ETH anytime at a 1:1 ratio.

From May 3 to May 23, 2024, you can maximize your mETH yields with not one, but two events on Bybit! The first event offers you a chance to win a share of the $5,000 MNT prize pool when you stake a minimum of 0.1 ETH. The second event is exclusive to new users; if you stake 0.1 ETH with your first staking product being mETH, you can earn extra from a prize pool of $2,000 MNT.

How Does ETH 2.0 Liquid Staking Work?

With ETH 2.0 Liquid Staking, you can choose to stake from a minimum of 0.01 ETH to a maximum of 5,000 ETH in order to earn daily stETH or mETH rewards. While the accompanying APR can go as high as 6%, it fluctuates on a daily basis.

Once you stake your ETH, the system automatically mints stETH or mETH at a 1:1 ratio depending on your choice. This means you don’t have to perform any on-chain activities or pay gas fees, as Bybit helps you with the process via Lido or Mantle. The minting process takes 15 to 30 minutes to complete. You can redeem your ETH at no fee, with the process taking around five to seven days, although redemption may be delayed should Lido or Mantle make any changes to your estimated withdrawal date. 

Meanwhile, you’ll also be able to use your stETH as collateral for trading on Bybit’s Spot market. If you have a Unified Trading Account (UTA), you can also trade using stETH as collateral. Since stETH and mETH are Lido DAO and Mantle LSD tokens, respectively, you can also choose to withdraw them from Bybit to use for yield farming or providing liquidity to liquidity pools in DeFi platforms.

However, if you withdraw stETH or mETH on any given day, you won’t receive that day’s yield distribution. Please note that transferring your stETH or mETH holdings to your Bybit Web3 Wallet is also considered a withdrawal.

How to Get Started With ETH 2.0 Liquid Staking 

To participate in Bybit’s ETH 2.0 Liquid Staking, you’ll first need to complete the KYC process with a minimum of Identity Verification Lv.1. The staking process is the same for both stETH and mETH and requires just two steps, as follows.

Staking ETH

Step 1: Once you’ve completed KYC, proceed to navigate to the Finance tab, head to Earn and click on ETH 2.0. You’ll be directed to the ETH 2.0 Liquid Staking page. Click on Stake Now.

Step 2: Enter the amount you wish to stake. Tick the checkbox reading, “I understand that ETH will be converted to stETH at 1:1 ratio.” Click on Order Now. 

Note: If you’re placing an order for the first time, read the information in the confirmation pop-up box before clicking on Confirm.

Redeeming ETH 

Step 1:To redeem ETH, head to the ETH 2.0 Liquid Staking page and click on Redeem.

Step 2: Enter the stETH amount that you want to redeem for ETH. Read the redemption information on the right side before ticking the checkbox that reads, “I acknowledge and understand that stETH will be converted to ETH at a 1:1 ratio.” 

Step 3: Read the information in the confirmation box pop-up before clicking on Confirm. 

Once your redemption request is submitted, you’ll receive the ETH in your Funding Account in five to seven days. Please note that your order cannot be canceled once submitted. 

Viewing Orders and Rewards

You can check the status of your ETH 2.0 Liquidity Staking orders in two ways: 

• Click on View Order at the top right of the ETH 2.0 Liquidity Staking page to enter the Orders page, or 

• Click on Orders in the navigation bar, then select Earn Order → ETH 2.0. The staking and redemption orders are displayed as either In Progress or Completed.

You can also view your airdropped rewards from holding stETH in two ways:

• First, click on Finance in the navigation bar, then select Earn → ETH 2.0 → Distribution Record. 

• Otherwise, head to your Funding Account page, click on All Transactions, then change the Type to ETH 2.0.

Closing Thoughts

ETH 2.0 Liquid Staking is a valuable tool to help you earn passive income from your ETH holdings while you wait for Ethereum Spot ETF approval to get the green light from the U.S. Securities and Exchange Commission (SEC). 

On top of the low barrier to entry (since you can stake as little as 0.01 ETH), you can also earn rewards in multiple ways, thanks to the issuance of stETH tokens. Hence, you’ll be able to maximize your returns even as your ETH remains locked. 

As Ethereum continues to evolve, ETH 2.0 Liquid Staking presents an opportunity for you to contribute to the network's security and decentralization while earning rewards in the process. Whether you're a seasoned investor or new to crypto, ETH 2.0 Liquid Staking offers you a convenient way to earn yields while helping to secure the Ethereum ecosystem, thus paving the way for a more inclusive and decentralized financial future.

#LearnWithBybit