What is ether.fi?
Еther.fi is a decentralized, delegated, non-custodial staking protocol with a Liquid Staking Derivative token. A distinguishing feature of ether.fi is that stakers have dominion over their credentials. The ether.fi mechanism also permits the establishment of a marketplace for node services, where stakeholders and node administrators can enroll nodes to provide infrastructure services.
ether.fi is a delegated staking service that distinguishes itself from Rocket Pool and Lido by granting stakers full control over their validator keys. These credentials are required and adequate for validator node exiting.
How to participate in the airdrop?
- Visit the website ether.fi.
- Connect your wallet to Ethereum.
- Currently, you can stake ETH, wstETH, rETH, cbETH, or sfrxETH. Binance provides access to ETH.
- Users who stake their assets will earn pledging rewards.
- They are currently conducting a program dubbed “Early Adopter Programme.”They’ve mentioned that a survey of all stakers will be taken in the middle of April, and that stakers will receive increased staking yields and other benefits proportional to their bonus point accumulation.
- They’ve already hinted at launching a token dubbed “ETHFI”, so it’s highly probable that users who stake on their platform will receive an airdrop once they launch their token.
- There is no assurance that they will conduct an airdrop for early adopters. Only speculation exists.
For those who desire to stake multiples of 32 ETH, the following procedure is followed:
A proposal is submitted by a node operator in order to be designated a validator node to execute. Trusted node administrators may place a nominal proposal to have a node designated as available. The auction mechanism assigns validators to administrators of trustless nodes based on their winning proposal.
The staker deposits 32 ETH into the deposit contract on ether.fi. It also designates a node operator to execute the validator. Additionally, a withdrawal safe and two NFTs (T-NFT, B-NFT) that confer ownership of the withdrawal safe are created. Transferable T-NFT token representing 30 ETH. The B-NFT is soulbound and represents 2 ETH. The only method to recover the 2 ETH is if the validator is terminated or withdrawn entirely.
The staker encrypts the validator key with the successful node operator’s public key and transmits it as an on-chain transaction. The transaction generates an event for which the node’s operator listens. In future versions, a sharded-key DVT-based solution will supersede this step.
The validator is launched by the node operator using the decrypted validator key.
The staker (or node operator) can submit the exit command to terminate the validator and retrieve the staked ETH from the withdrawal safe. The staker may then burn the NFTs in order to recover their ETH, net of transaction fees.
The B-NFT is utilized to provide the deductible for slashing insurance (in the event of a slashing event) and represents the obligation to monitor the validator node’s performance. Due to its greater risk and responsibility, it offers a higher yield than T-NFT. ether.fi facilitates validator performance monitoring via notifications and alerts.
Liquidity Pool and eETH
Stakeholders with less than 32 ETH or who do not desire to monitor validator nodes can participate in ether.fi staking by minting eETH in the NFT liquidity pool.
The liquidity pool contract is comprised of a combination of ETH and T-NFTs (described above). ETH represents a modest percentage of the pool’s assets at any given time.
Minting and burning eETH
Assuming adequate liquidity, a holder of eETH can exchange it for ETH in the liquidity pool on a 1:1 basis. If insufficient liquidity exists, the exchange will initiate a validator exit.
Bondholders and the issuance of new T-NFTs and B-NFTs.
Those who desire to stake exclusively with B-NFTs (due to their higher yield) deposit ETH into the pool and join a queue to receive a B-NFT. These stakers are bond-holders and perform a function comparable to that of full-node stakers who have sold their T-NFT.
When the quantity of ETH in the liquidity pool exceeds a predetermined threshold, the next bond-holder staker in line is assigned. They generate private keys and initiate the staking procedure, in which 32 ETH is staked, and mint two nfts: the T-NFT for the pool and the B-NFT for the bond-holder.
When an investor deposits ETH into the pool, the pool mints and transfers eETH tokens to the investor. A holder of T-NFTs may deposit them into the liquidity pool and mint an amount of eETH equal to the T-NFT’s (oracle-determined) value.
What differentiates ether.fi is:
- Stakers generate and maintain their own ETH pledged credentials.Every validator that is launched via ether.fi generates a new NFT.
- With the vast majority of delegated staking protocols, the staker deposits ETH and is matched with a node operator, who generates and holds the staking credentials. Although this strategy can be implemented so that the protocol is non-custodial, in most cases it creates a custodial or semi-custodial mechanism. This can expose the bettor to a substantial and unknown counterparty risk.
With ether.fi, the staker retains control of their keys and ETH while delegating staking to a node operator. This substantially decreases their risk surface area.
For each validator activated through the protocol, the ether.fi mechanism mints an NFT. From a liquidity pool containing these NFTs, the Liquid Staking Derivative token eETH is created.