MetaMask Users can Now Stake Ethereum on the Wallet, but Should You?
World’s most famous crypto wallet MetaMask has introduced its staking functionality. Therefore, users can use the feature to lock up their ETH via staking protocols like Rocket Pool and Lido to earn rewards. However, the big question is whether the wallet users should stake their ETH.
Staking comes with its share of risks, like the inability to unstake ETH from staking contracts. But the Ethereum developers have recently said that the ‘unstake’ functionality is on the horizon.
Staking Providers
MetaMask users who are not afraid of taking risks will find staking a lucrative venture. The wallet’s official website shows that interested stakers can earn nearly 4.6% per annum on their ETH deposits with Rocket pool and about 5.3% with Lido.
Data on Lido’s Website indicates that the total value of ETH staked through its service is about $6.89 billion. Moreover, as a liquid staking provider, Lido allows users who have staked their ETH to receive a similar quantity of Staked Ethereum (stETH).
Holding stETH means that the stakers remain ‘liquid’ even after staking their ETH. Therefore, they can use their stETH on other Decentralized Finance (DeFi) services. However, stETH is currently priced lower than ETH. According to Coingecko, ETH is trading at $1.421 while StETH is sitting at $1,406.
Elsewhere, Rocket Pool, another liquid staking provider, offers stakers rETH after locking up their ETH. The bad news is that Rocket Pool on MetaMask is already at maximum capacity. Therefore, the wallet users can only stake their ETH via Lido for now.
Staking Benefits
As a Proof-of-stake (PoS) blockchain, Ethereum will become more decentralized and secure if users continue to stake ETH. That is quite a good thing for the blockchain, as many crypto enthusiasts consider Ethereum more centralized than the famous Bitcoin.
In addition, MetaMask users stand a chance to generate passive income from their staked ETH. However, this play is suitable for users who are long-term holders and are not planning on selling their ETH any time soon.
Staking Risks
Last month, ConsenSys, the MetaMask parent firm, outlined several risks in relation to staking ETH. The firm pointed out buggy smart contracts, significant token price fluctuations, and compromised third-party software as possible risks.
That said, Van der Wijden, an Ethereum developer cites that the decision to stake or not is in the hands of the ETH holders. He adds that they should listen to their gut and conduct thorough research to examine if the risks associated with staking are worth it.
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