The cloud division of crypto exchange Coinbase has announced a strategic partnership with decentralized infrastructure provider Kiln to offer the platform’s customers easier access to native Ethereum staking.
In order to join the network independently as a validator and start earning from staking, it is in fact necessary to have at least 32 ETH in one’s wallet; however, Coinbase now wants to reduce this figure by lowering the access barriers for its users.
There are also other alternative solutions to earn yield from one’s ETH, such as using liquid staking protocols such as Lido Finance, which is increasingly proving its hegemony in this niche market despite the latest discovery of a flaw on the LDO token contract.
See all the details below.
Coinbase Cloud and the partnership with Kiln to facilitate access to native Ethereum staking
Coinbase Cloud, an in-house division of the cryptocurrency exchange, recently partnered with decentralized infrastructure provider Kiln to offer its users democratic access to native Ethereum staking.
Indeed, the latter is currently intended only for the “rich” since in order to activate the validator software and start earning an annuity on one’s coins, one must have a minimum balance of 32 ETH, or about $51,000.
Needless to say, 99% of accounts on Coinbase have a lower ether count and can only do staking with third-party services, particularly through “liquid staking derivatives” (LSD) protocols.
However, with the latest integration of Kiln’s on-chain staking, native access to Ethereum has been scaled back allowing smaller amounts to be staked directly from one’s wallet.
The flexible operation of Kiln is simple: through the use of smart contracts multiple users pool their deposits together to collectively reach the key figure of 32 ETH.
Coinbase’s move benefits individual customers against the power of whales, offering an innovative solution that will compete with the rest of the fractional staking protocols.
All without having to deal with centralized entities but leveraging the service through a self-custodial wallet.
Laszlo Szabo, CEO and co-founder of Kiln commented on the recent partnership as follows:
“We are thrilled to have worked with Coinbase Cloud and to welcome them as the first (non-Kiln) node operator leveraging the Kiln Onchain Staking Platform. This integration with Coinbase Cloud is unique because it allows them to enable other wallets and services, including DEXs, with the same limitless ETH staking solution that will be offered by Coinbase Wallet.”
A flaw in the LDO token contract is not enough to bring down the hegemony of liquid staking protocol Lido Finance
Other decentralized solutions different from the one offered by Coinbase Cloudto enter as a validator within the Ethereum network are liquid staking protocols, which while not providing native access, offer a liquid token in exchange for deposited ETH.
The best known of these protocols is Lido Finance, which maintains the lead as the most widely used liquid staking service, counting more than 8.6 million ETH deposited on the beacon chain, for a marketshare of 32.65% in liquid staking.
Very interestingly, a flaw in the LDO token contract was discovered over the weekend that could have created trouble in the decentralized platform.
In reference to this very thing, blockchain security company SlowMist had stated that it would potentially allow malicious parties to make “fake deposits” by executing transactions even with insufficient funds.
In any case, Lido does not seem to have lost ground due to this minor incident since the LDO and stETH funds remained safe, according to the project team via a Twitter post.
At the same time, it was said that this flaw affects all ERC-20 tokens in general, and that a guide for LDO integration will be published soon to fix the problem.
Hence, Lido maintains its hegemony, and secures its place as the richest decentralized protocol on the web3 with a $13.94 billion TVL and a growing trend of Ether deposited in the liquid staking platform.
Lido’s power is scaring off other competitors and the Ethereum ecosystem as a whole since the provider is centralizing too much staking within a single entity.
A few days ago, providers Rocket Pool, StakeWise, Stader Labs, Diva Staking, and Puffer Finance proposed an internal rule requiring that none of them can hold more than 22% market share in this context.
Vitalik Buterin also commented on this sensitive issue, stating that “improving staking decentralisation is urgent.”