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A tour of Ankr Staker & liquidity provider SnowSwap
There are a lot of really cool dApps on Ethereum right now. The problem with Ethereum, though — as everybody knows — is the fees associated with its current proof-of-work validation. And that’s the promise of Ethereum 2.0: that the move to proof-of-stake will speed everything up and reduce fees.
Given my excitement for Ethereum 1.0, I was eager to get involved with 2.0. Unfortunately, staking ETH2 requires 32 ETH — and I had more like one.
There’s a solution for that, too! Staking pools! Today, I’ll share my experience with staking ETH2 and using the wrapped token to gain bonus rewards while my ETH assets are frozen.
Usual disclaimers apply. I’m a hobbyist. None of this is advice. Do your own research, and don’t gamble with what you can’t afford to lose.
Staking with Ankr
There are few ETH2 staking options available, but the first one I learned about was Ankr. Ankr Staker allows you to stake ETH2 with as little as 0.5 ETH. When you stake, you will exchange your ETH for an equal amount of Ankr’s wrapped token, aETH.
The cool thing about aETH is that it represents your ETH investment plus earned rewards.
When I joined, I staked 1 ETH and received 0.99 aETH. This was a little confusing to me at first, but it made sense after a week or so — I could see that 1 aETH was now worth 1.01 ETH, and after another week, it had grown to 1.03 ETH.
That’s pretty cool. My 1 ETH is frozen until the launch of Ethereum 2.0, but I can watch the value grow by checking in with Ankr.
What’s cooler is that even though I’m staked with ETH2 and my assets are frozen, I still have the wrapped token to play with!
Cool? Frozen? Let’s talk about SnowSwap!
I learned about SnowSwap from Ankr’s article on Medium, Stake aETH with our new partner SnowSwap. Well, that sounds just about perfect, right?
SnowSwap’s eth2SNOW liquidity pool solves two problems. First, it eliminates the ETH entry requirement for anybody interested in staking ETH2. You can trade for whatever fraction of an aETH you’d like, and any aETH you obtain can later be exchanged for the corresponding percentage of staked ETH plus rewards.
The second problem it solves is that it allows people who have staked their ETH to earn rewards immediately by serving as liquidity providers. Providing liquidity to the eth2SNOW pool offers a high APY, currently around 24%. Rewards are paid in SnowSwap’s native token, SNOW, so the profitability of rewards is tied to that.
Sound good? Let’s set it up!
First, you need to withdraw your aETH tokens from Ankr at the site above: eth2.ankr.com. Now head to SnowSwap and connect your wallet. Providing liquidity is a two-step process. First, exchange aETH for the LP token, eth2SNOW. Then, stake the eth2SNOW to begin earning rewards.
SNOW tokens have seen a lot of volatility in the past week — like just about all cryptocurrencies — and are currently worth about $46 each. The screenshot above is after just 10 days. At the presumably-budget-rate of $46, this still represents a $302 gain for the year. SNOW has been as high as $150 in the past month, though, so the final value earnings after a year could easily be 3x or more.
It’s also worth noting that SnowSwap is in its infancy and still running a beta version. I think this bodes well for its future, though, and I’ve seen estimates for SNOW as high as $700-$1500. The investment has the potential to be quite lucrative for the “frozen” ETH!
Using Ankr’s staking pool is a great way to start earning ETH2 rewards today, even though the rewards won’t be accessible until Ethereum 2 launches in 1 or more years. The wrapped token they return in exchange gives a distinct advantage, though, allowing you to provide liquidity and effectively earn double-rewards while you wait.
The gas fees to retrieve aETH, exchange for SnowSwap’s LP token, and stake the LP token were annoyingly high. It probably cost me $100 to do it all, but now that the resources are parked and earning, I feel pretty good about it.
Ethereum’s hurting right now because of its fees leading to an exodus to other chains like Binance Smart Chain, but they have a big lead on the rest of the pack. The competition will certainly chip away at it, but if Ethereum 2.0 can deliver on its promises before it’s too late, it’s going to see tremendous growth in value.
The pieces are in place, and now we wait and double-earn rewards along the way!
I’m looking for feedback! Are you excited about Ethereum 2.0? Have you staked elsewhere, or have you found a better use for a wrapped token? Leave a comment and let me know!
This article was originally published on read.cash on February 28, 2021.