Stader ETHx

Stader ETHx (ETHX) is a liquid staking token that allows users to stake their Ethereum (ETH) without needing to lock assets or maintain the required infrastructure. The token represents the value of staked ETH plus accrued staking rewards and is backed by ETH staked on the Ethereum blockchain.

Stader Labs, the creator of ETHX, designed the tokenomics with the goal of decentralizing Ethereum staking, which is currently dominated by a few large entities. The initial phase of tokenomics aimed to make staking more accessible by reducing the capital requirements for node operators. This was achieved by enabling node operators to run nodes with as little as 4.4 ETH, significantly lower than the 32 ETH required for solo-staking.

The second phase of tokenomics, which was expected to launch a few months after the initial phase, introduced additional features such as SD borrowing. This allowed node operators to have ETH-only exposure and run nodes for LSDs (Liquid Staking Derivatives) for the first time in the ETH ecosystem. This phase also promised higher yields for node operators, with ETH-only yields expected to be 30% more profitable than solo-staking.

Stader ETHx has been designed to provide users with a reliable and rewarding liquid staking solution. It offers instant liquidity and allows users to participate in DeFi activities while staking their ETH. The token is redeemable for ETH plus accrued staking rewards following an unstaking queue of 7-10 days.

Overall, Stader ETHx aims to promote decentralization and accessibility in Ethereum staking while providing users with a unique value proposition and node operators with higher yields and more flexibility.

Stader ETHx, also known as ETHX, is a liquid staking token designed to provide users with a robust and decentralized way to stake their Ethereum (ETH) while maintaining liquidity and earning rewards. Here's a detailed overview of how it works:

When a user deposits ETH into the ETHx staking contracts, the protocol issues an equivalent number of ETHx tokens back to the user. These tokens act as a liquid representation of the user's staked ETH, allowing them to maintain control over their assets without sacrificing potential staking rewards.

Once deposited, the user's ETH is managed by the Stader staking manager, which leverages a multi-pool architecture. The staked Ethereum is split between Permissionless and Permissioned node operator pools. This setup ensures scalability and decentralization while optimizing the return potential for the staked assets.

The ETH from the pools is then allocated to the ETHx Node Network, a decentralized group of Ethereum nodes that interact with the protocol's staking contracts. These nodes perform critical validation tasks for the Ethereum Beacon Chain, generating staking rewards.

As the nodes generate rewards, these are accumulated and lead to an increase in the exchange rate of ETHx relative to ETH. This growth mechanism ensures that ETHx tokens increase in value over time, reflecting the staking rewards earned from the ETH staked.

• Decentralized: ETHx supports stakers of all shapes and sizes, encourages permissionless node operations, and fights for a decentralized staking ecosystem.
• Accessible: There is no minimum stake amount, and easy-access staking guides are provided.
• Reliable: The system uses triple-audited smart contracts and an experienced team that has built on six other chains.
• Rewarding: ETHx offers best-in-class staking rewards, including MEV and DeFi rewards.

Stader ensures the security of staked assets through comprehensive audits of its smart contracts. The platform has partnerships with various DeFi protocols, such as Curve, Balancer, and Aave, to provide users with access to top-tier opportunities within the DeFi landscape.

In summary, ETHx provides a flexible, scalable, and profitable solution for Ethereum staking, allowing users to earn rewards and participate in the DeFi ecosystem without locking up their assets.

Stader ETHx (ETHX) offers several strengths that make it an attractive option for Ethereum staking:

1. Liquidity and Flexibility: ETHx allows users to maintain liquidity for their assets while staking Ethereum, enabling them to participate in DeFi activities without sacrificing potential staking rewards.

2. Scalability and Decentralization: The multi-pool architecture ensures scalability and decentralization by splitting staked Ethereum between permissionless and permissioned node operator pools, optimizing return potential.

3. Reward Generation: The decentralized ETHx Node Network performs critical validation tasks for the Ethereum Beacon Chain, generating staking rewards that increase the value of ETHx tokens over time.

4. Accessibility: ETHx aims to make Ethereum staking more accessible and rewarding for a broader range of users, promoting decentralization and capital efficiency.

5. Competitive Rewards: ETHx offers competitive staking rewards, including access to MEV (Maximum Extractable Value) and tips, making it a robust alternative for users.

6. No Lock-up Requirements: Users can stake their Ethereum without lock-up or minimum deposit requirements, providing greater flexibility.

7. Redeemability: ETHx tokens are redeemable for Ethereum plus accrued staking rewards following an unstaking queue, ensuring users can recover their assets.

These strengths position ETHx as a promising solution for Ethereum staking, offering a balance of liquidity, decentralization, and reward potential.

Stader ETHx (ETHX) faces several risks, including:

• Massive slashing events: ETHX is vulnerable to slashing events, which can result in significant penalties for node operators and stakers.
• Censorship of transactions: Centralization in the liquid staking market can lead to censorship risks, compromising the integrity of the Ethereum network.
• Improper validator setup: Node operators can front-run the first deposit transaction to set malicious withdraw credentials, potentially stealing staked ETH. Stader mitigates this by checking for valid signatures and imposing penalties for frontrunning.
• Reward loss prevention: MEV misappropriation can occur if node operators do not share MEV rewards fairly. Stader has partnered with Rated Network to identify and penalize such instances.
• Oracle security risks: Oracle operators must provide security collateral to back their performance. Any misbehavior can result in penalties and loss of collateral.
• Protocol health security risks: Stader has implemented health metrics to monitor the system's performance. Alerts are triggered for issues such as circulating supply increases, role changes, lack of Oracle consensus, and unusual reward behavior.
• Economic security risks: Node operators are required to provide collateral to protect against operational risks. Stader ensures that this collateral is sufficient to absorb any losses.
• Code security risks: ETHX has been audited by multiple firms, but there is still a risk of undiscovered bugs. Stader has a bug bounty program to identify and address these issues.
• Node operational risks: Node operators can run validators with ETHX only after pre-recording an exit message, ensuring that they are accountable for their actions.
• ETH network degradation risks: Stader has implemented a safe mode to manage risks during network degradation, ensuring fair penalty distribution between node operators and stakers.

• Amit Gajjala: Co-founder of Stader Labs.
• Edouard Lavidalle: Co-founder at Stakin, involved in ETHx governance.
• Pratik Agarwal: From Accel Partners, a global VC fund, involved in ETHx governance.
• Richard Galvin: CEO at Stakin, involved in ETHx governance.