Metamask has reportedly introduced staking services as a validator on the Ethereum Blockchain, eliminating the need for users to prepare their own hardware or join a fund pool.
This new service is anticipated to disrupt existing staking validator providers that rely on fund pool mechanisms. While intriguing, many users are questioning whether the returns justify the service fees.
Metamask Introduces Staking Validator Services
On January 18, 2024, Metamask officially announced that its wallet application can now be used not only for storage and trade transactions but also for staking.
Staking, in this context, refers to becoming a validator on the Ethereum Blockchain, where users of this service run their own nodes, making them official validators.
The noteworthy aspect of this service is that users don’t need to prepare any hardware or tools to become validators, as Metamask handles everything.
Additionally, users are not required to connect their wallet to other decentralized applications, and they don’t need to seek pools to join to become validators on the Ethereum Blockchain.
The process involves using the Metamask Portfolio, where users connect their Metamask wallet to the application and select the staking column to utilize the validator staking service listed in the application.
Aside from validator staking services, Metamask is also seen providing pool staking services by gathering funds from investors in various tokens and coins.
Currently, there are four options: sETH and rETH for the Ethereum Blockchain and MATICX and stMATIC for the Polygon Blockchain.
The availability of staking options through pools is due to the diversification of services, as Metamask’s validator staking service has two limitations.
Firstly, the service is currently only available for becoming a validator on the Ethereum Blockchain, with no other options.
Secondly, the service still requires users to stake a minimum of 32 ETH or the minimum requirement to become an independent validator on the Ethereum Blockchain.
Metamask Validator Service Mechanism
To use this service, users must lock in 32 ETH as initial capital for staking and proceed to become validators themselves. This figure is the minimum, and users can stake more than 32 ETH to receive larger rewards.
At the time of writing, users staking will receive a reward of 4% per year, with this 4% already including a 10% deduction from Metamask’s service fee.
As per its slogan, users only need to stake and do nothing else because Metamask controls all processes.
Metamask collaborates with Consensys to provide this validator staking service, ensuring smooth operations, as Consensys is a reliable staking service provider on the Ethereum Blockchain.
This collaboration minimizes the risk of slashing or reducing rewards and market share for validators.
Using hardware independently can expose validators to potential reductions in rewards and market share due to the risk of power outages or electrical issues, which Ethereum sanctions.
To use Metamask’s service, users only need to wait for two days after locking or staking ETH until they are recognized as a single validator.
Although it requires a longer confirmation time compared to other staking services, Metamask’s service may attract stakeholders who prioritize independence in staking.
When compared to other staking services that only require users to lock ETH, Metamask’s service is currently relatively profitable.
A comparison can be made with Lido, the largest staking service provider on the Ethereum Blockchain. Despite faster confirmation times and lower minimum capital requirements, Metamask offers greater profits.
Considering that investors in the Ethereum Blockchain typically have substantial funds, particularly due to transaction fee instincts, this advantage could indicate the potential success of Metamask’s service.
While other options, such as centralized exchanges like Coinbase, exist, the service fees on exchanges are generally higher or comparable to Metamask. For instance, Coinbase charges a 25% fee, while Binance charges a 10% fee.
Therefore, despite the trade-offs, Metamask has the potential to disrupt the staking service market with its new features. For investors seeking passive income portfolio diversification, this service can be explored directly here.
