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Native staking (solo staking)
You own the individual validator which will earn rewards that are solely for you, rewards are not shared with any other user in this case. Your 32 ETH is not mixed with other users and is deposited against your validator directly.
‍Rewards are not earned instantly after your initial staking transaction as there is an activation process enforced by the protocol. You may need to wait days, weeks (or months in extreme cases) before your validator is active. Similar to activation, there is a deactivation, and exit queue processes that may take days or weeks.
Native staking is viewed as the least risky option when it comes to the staking landscape.
Validator-as-a-Service
On the other hand, validator-as-a-service providers, like Kiln, offer the convenience of managing the validator on your behalf. They handle the technical aspects, maintenance, and ensure its smooth operation. In exchange for their services, they typically charge a commission on earned rewards.
While different validator-as-a-service providers may have variations in their offerings and billing processes, their core purpose remains the same: to alleviate the burden of managing a validator and provide you with a hassle-free staking experience for a reasonable fee.
Balancing rewards and accessibility: Locking ETH, bonding and unbonding periods
Additionally, it’s important to be aware of the bonding and unbonding periods (known as validator entry, exit, and withdrawal queues). This refers to the time it takes for validators to enter and exit the system, as well as the withdrawal queue that processes the return of your 32 ETH. For most of this period your validator will not be earning any rewards while your 32 ETH remains inaccessible.
Another consideration is that ownership of the validator, as well as the withdrawal credentials, are permanently tied to the wallet from which you initiated the stake. You cannot transfer ownership, exit your validator, or withdraw your 32 ETH to any other wallet. With this in mind, it is imperative that you never lose access to your wallet or private keys.
Pooled staking
Because this is not supported natively on the protocol, pooled staking can be viewed as more risky than native staking because of the additional counterparty risk.
While Ethereum’s protocol does not natively support staking pools, third-party solutions offer pooled staking services to fill this gap.
‍This collaborative approach allows individuals to benefit from staking rewards while mitigating the need for owning and operating entire, individual validators. Users effectively own a percentage of the pool based on their contributions.
In contrast to native staking, staking pools offer immediate rewards without a bonding period. This does mean, however, that new entrants to the pool are diluting rewards for those who have already staked tokens.
‍Full or partial withdrawals of your original stake can be requested at any time, subject to processing times.
Your staked ETH is locked and not readily available for immediate use or trading, just like in native staking. As the pool earns rewards, the value of your initial stake grows over time. Therefore, when you decide to withdraw either partially or in full, the pool will return your ETH to you, including the additional amount gained from the accumulated rewards.
Liquid Staking
Liquid staking is pooled staking with a twist.
You stake any amount of ETH into a pool, with the pool operator managing the validator infrastructure. Pools earn rewards via validators securing the network, proposing and validating blocks, and maintaining consensus. Rewards are pooled and distributed to users based on each participant’s percentage ownership.
The primary difference is that you will receive a transferrable receipt token (liquid staking token) in exchange for your stake. The token represents your stake in the pool, acts as proof of ownership, and allows withdrawal rights. It can be transferred to other wallets, and may be accepted by other services as collateral for further reward generating activities all while you continue to earn staking rewards.
Liquid staking is often viewed as the riskiest option compared to pooled or native staking, as it introduces further counterparty risk as the receipt tokens are transferable.
Accessibility. Your staked ETH is still locked and not readily available for immediate use or trading, however your transferrable receipt tokens are accessible, liquid, and give you more flexibility.
Depending on the pool operator or the application built on top of the pool, there are various types of receipt token models available, such as aTokens (AAVE) and cTokens (Compound). These token models have distinct characteristics.
‍With aTokens, the amount you hold will remain constant while their value grows over time. This means that the number of aTokens you own will not change, but their value will increase as the pool generates more rewards.
cTokens maintain a fixed exchange rate with the underlying asset. As rewards are earned in the pool, the number of cTokens you hold increases. This allows you to accumulate a greater quantity of tokens representing your share of the pool’s rewards.
‍aTokens are highly composable, relative to cTokens, and can be easily integrated and utilized across diverse DeFi protocols, applications, and platforms.
==Ultimately, the choice of staking approach depends on your risk appetite, technical capabilities, and desired level of control and flexibility