2023: Solo staking year in review

As the only provider of solo staking services and the only organisation that enables our clients to become solo stakers, it seems time for a year in review.

Solo Staking: Not Winning, Yet

In 2023, solo staking continues to be a minority sport that Launchnodes hosts. We are proud of our customers who stake Ethereum on the infrastructure they own and access exclusively. They keep all their execution and consensus layer rewards, as well as their data, allowing them to choose between bare metal, public cloud, or their own data centers. We take no staking commission. Although we do not take the same volume of customers as Figment or Kiln, our customer base, who require a minimum of 32 ETH, is still tiny compared to the juggernaut that is liquid staking, specifically Lido.

The Expanding Ethereum Ecosystem

My wise and informed colleagues balked at this being the whole story, or even the most interesting bit. The expanding ecosystem of liquid staking started in 2023, and now that withdrawals are fully enabled, confidence abounds that the pie will be shared. Staderlabs, Rocketpool, and even newer players like Claystack, will all get bigger parts in the next episode.

These same wise colleagues then remind me of Eigenlayer and the infrastructure opportunity that decentralising L2 sequencers represents. They ask whether we will call it solo sequencing or something else. Regarding Eigenlayer, I met Sreeram this year in Istanbul. He seems like a lovely man with exciting ideas, who is building fast.

What I take from my colleagues’ insight is that solo staking sits as an activity whose incentives and implementation will change, but the approach concept itself is growing, supported by an ecosystem that sees itself around for the long term, not just the next bull run.

Lido – The Big Friendly Giant

The nature of being a giant is that being massive makes you scary to non-giants, simply by the space you take up. Even if, like Lido, you are friendly and have the best intentions. Full disclosure: we are a node operator for Lido, and our inside view is of people who care very much about Ethereum being a mass participation activity, decentralisation, and operational excellence. This comes through the bitter experience of having a slashing event as a Lido NO (for which we compensated all losses to the protocol) and knowing how much the Lido ecosystem cares about its end customer and the extent to which they are protected.

But the more massive Lido gets, the question becomes whether it is the giant in the room or the room itself, as the challenges of centralisation, smart contract risks, and protocol risk all become harder to manage. The emergence of new LSDs and the desire of the Lido DAO to do the right thing make me think it’s a solvable challenge, but the challenge is real.

Solo Staking – A Smaller Group of Elves?

Launchnodes needs to learn from Lido in terms of:

  • Making solo staking easier, getting rid of any requirement for the CLI for generating keys, and deploying and maintaining validators on the infrastructure of your choice.
  • Enabling our customer base, who are solo staking, to become staking pools when EIP 7251 is enabled, and all of them can stake 2048 ETH per node instead of 32.

We are learning fast and have been working on and thinking about these issues for the past three months and will be excited to release new open-source tools and products in early 2024 to help on both counts.

Solo staking has always been and continues to be defined by the Ethereum Foundation as the gold standard for Ethereum Staking. We see our job as making it much easier for our customers to become solo stakers in 2024 than it has been in 2023.

My Mum passed away on New Year’s Day. She was a socialist, the best amateur stock picker and investor I knew, as well as being a polymath. She taught me everything I know, and without her education and instruction, I never would have been drawn to this space.

Thank you, Mum, and Happy 2024.

Jaydeep Korde,
CEO of Launchnodes

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