Staking

What is staking? 

Staking is the process of token holders participating in the block creation and validation process. For Ethereum, the minimum staking amount is 32 Ether. Staked Ether are locked to participate in the block creation and validation process, with stakers earning a staking reward for their contribution to securing the network.  

What is a validator?

A validator is a computer node that participates in the block creation and validation process. To run a validator, a deposit of 32 Ether is needed before the validator can perform the block creation and validation tasks.  

What are the expected staking rewards?

The staking rewards depend on the number of active validators. The rewards change over time and are not within Sygnum’s control. You can see the current staking rewards here

How are the rewards generated? 

Staking rewards on Ethereum are generated from the Ethereum protocol itself. The Ethereum protocol incentivises users to stake and run validators by rewarding them with newly created (minted) Ether tokens. When Ether is staked, the protocol rewards users in proportion to the amount of Ether they have staked. 

Why are my staked Ether locked and how long will this remain? 

Staking on Ethereum was enabled in phase 0 of the Ethereum upgrade to a Proof-of-Stake protocol in December 2020. This was the first in a series of steps to upgrade the Ethereum Blockchain. During phase 1.5, staked Ether is held on a separate Ethereum network (called a Beacon chain) until it merges back into today’s Ethereum network. Staked ether can be withdrawn at the completion of Phase 1.5, currently scheduled for the end of 2022. Please note that this date is provisional, and that Sygnum has no control over this schedule. Rewards are locked until phase 1.5 commences, along with the initially staked Ether

Why can I stake only multiples of 32 Ether? 

A minimum of exactly 32 Ether must be deposited to a validator to activate them to participate in the Ethereum block creation and validation process. Further staked amounts also need to be in multiples of 32 to enable the funds of individual stakers to be segregated. 

At Sygnum, we always keep your funds segregated and do not pool your funds with other clients when staking Ether. For example, it is not possible to stake only 10 Ether and keep the funds of individual stakers segregated. This is the reason that only multiples of 32 Ether can be staked. 

How long will my staking request take?

When 32 Ether tare staked, a new validator node needs to be activated on the Ethereum Proof-of-Stake network. Because only a limited number of validators can be activated per Epoch (which lasts approximately 6.4 minutes) a queue may build up if there is a higher demand for new validators to be activated than the network supports. The exact validator activation rate depends on the number of already active validators. More details can be found here. The expected waiting time and number of validators in the queue is updated here.

Why is the balance in the staking module of the Sygnum e-banking portal different to the one in the overview? 

During phase 1.5 of the Ethereum upgrade rollout (expected in the second half of 2022) the balance in the e-banking overview will only reflect the initially staked amount of Ether and not any of the rewards. To see up-to-date information about your staked Ether and earned rewards, please look at the staking section in the Sygnum e-banking portal. 

Why do I need to send slightly more than 32 Ether to stake?

The deposit of a minimum 32 Ether for staking, or in some cases transferring Ether to an intermediate address from some custody solutions, incurs a transaction cost. To ensure that the minimium required Ether are received on the validator, slightly more than 32 Ether are needed to pay for these transactions. This amount is automatically calculated in the staking application.

How can I stake my Ether in my Sygnum wallet?

On the landing page in the Sygnum e-banking portal, choose the staking tab in the digital assets section and Click on Ethereum 2.0 . If you have multiple client profiles linked to your e-banking user, please select one. You are then taken to an overview screen that displays your trading wallets. You can then choose a trading wallet that contains at least 32 Ether to start stalking. 

What are the benefits of using Sygnum’s staking offering?

Sygnum’s offers you a highly secure and easy-to-use staking solution, and manages the process of setting up validators, calling the deposit smart contract automatically in the background. Furthermore, Sygnum’s staking solution is integrated with our secure institutional-grade custody solution, giving Sygnum clients the peace of mind that their assets are managed by a fully regulated Swiss bank. 

What are the costs for staking? How and when are the fees charged? 

Please refer to the private and corporate price list or get in touch with us here for more information about our fees.  

At the end of each month, a fixed percentage of the rewards that have accrued since the last billing cycle are charged in fiat. Please ensure that you have sufficient funds in your fiat account to cover the fees. 

If you decide to stake before phase 1.5 of the Ethereum upgrade goes live, the fees are accrued but not charged. The fees on all rewards that have been earned up until that point in time will be charged when phase 1.5 of the Ethereum upgrade is live. 

Are my staked Ether secure? 

The private keys to your staked (and unstaked) Ether are secured in Sygnum’s institutional-grade multi-custody solution. 

Can I use my staked Ether as collateral for a Lombard loan?

No, it is not possible to use staked ether as collateral for a Lombard loan as margin calls are not possible when the asset is locked.   

Can I trade my staked Ether?

You cannot trade your Ether once they are staked. Please note that staked Ether cannot be unstaked until the Ethereum upgrade that enables withdrawals of staked Ether is live.

How high are my Ether staking rewards, and are they guaranteed?   

Your Ether staking rewards depend on the number of active validators on the network. The rewards change over time and are not under Sygnum’s control. You can see the current staking rewards here.  

When will I receive my Ether staking rewards?

Once staking rewards are available, they will be added to your Ether balance on a continuous basis and available in reports. Once phase 1.5 of the Ethereum upgrade has gone live, your ether can be unstaked or remain staked to generate additional staking rewards.

Is there a risk that I may I lose my staked Ether? 

Staking generates a yield but also comes with the risk of reduced rewards due to changing validator dynamics, and also potentially the loss of principal Ether funds if the validator duties are not met. Sygnum has diligently reviewed and selected a reliable infrastructure provider that minimises slashing and other risks.  

Sygnum is not responsible for any staked Ether that is lost due to a delayed or unsuccessful network upgrade as they are not within Sygnum’s control.  

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