If you are interested in staking your Ether (ETH) and earning rewards on the Ethereum 2.0 network, you might have heard of Stader ETHx, a liquid staking token that aims to provide a decentralized, scalable and profitable solution for ETH holders. In this article, we will explain what Stader ETHx is, how it works, and why it could be a game-changer for the future of Ethereum staking.

What is Stader ETHx?

Stader ETHx is a liquid staking derivative (LSD) token that represents a share of the ETH staked through Stader Labs, a multi-chain staking protocol that supports various proof-of-stake (PoS) blockchains. Stader Labs allows users to stake their PoS tokens, such as BNB, MATIC, FTM, NEAR and more, and earn staking rewards as well as additional yield from various decentralized finance (DeFi) opportunities.

Stader ETHx is the LSD token for Ethereum, which means that users can stake their ETH with Stader Labs and receive ETHx tokens in return. ETHx tokens can be used to access DeFi protocols that support them, such as Aave, Balancer, Quickswap and more. This way, users can enjoy both the staking rewards and the DeFi yield from their ETHx tokens.

How does Stader ETHx work?

Stader ETHx works by pooling the ETH from users who want to stake with Stader Labs and distributing them to different node operators who run validators on the Ethereum 2.0 network. These node operators can be either permissionless or permissioned, meaning that they can be either chosen by Stader Labs or by the users themselves.

Stader Labs has designed ETHx to have a low bonding requirement of only 4 ETH per validator, which means that users can start staking with as little as 4 ETH and become home stakers. This is much lower than the 32 ETH required by the Ethereum protocol itself, which makes staking more accessible and affordable for smaller investors.

Stader Labs has also designed ETHx to have a multi-pool architecture, which means that there are different pools of validators that users can choose from. These pools include:

- Permissionless pool: This pool allows anyone to run a validator node and join the pool without any permission or approval from Stader Labs. This pool is more decentralized and trustless, but also more risky and volatile.

- Permissioned pool: This pool allows only selected node operators to run validator nodes and join the pool with permission from Stader Labs. This pool is more centralized and trusted, but also more stable and secure.

- Distributed validator technology (DVT) pool: This pool allows node operators to run validator nodes using a technology that splits the validator keys among multiple parties, making them more resilient and fault-tolerant. This pool is more advanced and innovative, but also more experimental and complex.

Users can choose which pool they want to stake their ETH with based on their preferences and risk appetite. They can also switch between pools at any time without any penalty or lockup period.

Stader ETHx aims to provide best-in-class staking yield to its users by exposing them to various sources of income from the Ethereum network. These sources include:

- Staking rewards: These are the rewards that users receive for securing the network by staking their ETH with validators. The current annual percentage rate (APR) for staking rewards on Ethereum 2.0 is around 6%.

- Miner extractable value (MEV): These are the profits that validators can make by ordering or reordering transactions in a block to benefit themselves or others. MEV can increase the revenue of validators by up to 30%.

- Tips: These are the optional fees that users can pay to validators to prioritize their transactions in a block. Tips can increase the revenue of validators by up to 10%.

Stader Labs charges a competitive commission of 10% on these sources of income, which is shared equally between the node operators and Stader Labs itself. The remaining 90% goes to the users who stake their ETH with Stader Labs.

Why is Stader ETHx beneficial for the future?

Stader ETHx is beneficial for the future of Ethereum staking for several reasons:

- It increases the decentralization and diversity of validators by enabling home Stakers to run their own nodes without relying on third-party services.

- It enhances the scalability and resilience of validators by offering multiple pools of nodes with different characteristics and trade-offs.

- It maximizes the profitability of staking by giving users access to multiple sources of income from the network.

- It enables liquidity and composability of staked assets by allowing users to use their ETHx tokens in various DeFi protocols.

- Stader ETHx is built for rewards. It leverages Stader’s multi-chain partnership expertise to offer you the highest staking rewards, including MEV rewards and additional yield from other chains like Polygon and BNB. You can also use your ETHx tokens to access various DeFi services and products on these chains, such as lending, borrowing, swapping and farming.

- It uses audited and non-custodial smart contracts to ensure that your funds are always under your control. You can redeem your ETHx tokens for Ether at any time with a 1:1 ratio. You can also rest assured that your staked funds are protected by a low bonding requirement of only 4 ETH per node operator, which covers the key tail risks that could impact your staked funds.

In conclusion, Stader ETHx is a liquid staking token that offers a unique value proposition for ETH holders who want to stake their coins and earn rewards on the Ethereum 2.0 network. By combining decentralization, scalability, profitability and liquidity, Stader ETHx could be a game-changer for the future of Ethereum staking.