32 is one of my favorite numbers. There are 32-bits in an IP Version 4 address, I was 32 years old when I went to live in Iraq. If you add 10 to it, you get the answer to life, the universe, and everything. But why would I want to own 32 Ethereum?
Ethereum is going through a transition from a Proof-of-Work (PoW) to a Proof-of-Stake blockchain during the Casper hard fork. If you want to unilaterally host your own consensus node, that is, and not have to pool your ETH with others, you’ll need to own 32 ETH. While the cost of 32 ETH is not chump change, even at current prices, we are still close to within ten percent of all-time highs.
Most estimates I have seen put staking rewards between 5-10%, but this number should vary depending on how many stakers are on the network. Going forward, the more expensive the ETH token becomes, the less people who will be running a node. The less people running a node, the higher rewards node operators will receive. For more information, check out: https://www.stakingrewards.com/asset/ethereum-2-0
While I’m Waiting For 2.0
So how do I currently HODL my ETH? I sent just over half my ETH to BlockFi, where I get 4.5% interest paid to me in Bitcoin. This is a really cool feature, because I can stack Satoshis while I’m holding Ethereum and waiting for ETH 2.0 to kick off. If I leave those Satoshis in my BlockFi Account, they start earning interest on those too! That being said, I refuse to put all of my eggs in one basket, so I hold the rest of my ETH on my Ledger Nano hardware wallet.
When ETH 2.0 Arrives
When ETH 2.0 arrives and I want to participate in staking, I have a couple options. I can:
- Find a stake pool
- Host my own node
Stake pools are good if you would like to stake ETH with less than 32 tokens. The downside is you will need to deposit your ETH into the pool’s wallet, and also pay fees. If you prefer to use a VPS provider or host your own physical node, you can run the Ethereum 2.0 node software yourself. This means you could maintain control of your private keys, but would be directly responsible for the security, and care and feeding of your consensus node.
But Those Returns Aren’t Spectacular!
For some people, single digit percent returns in the crypto world are something to laugh at. I disagree. While some people might be able to simply trade ETH and get a better return, that requires active participation. What I’m talking about here is passive income. I fully understand that these types of returns are not impressive for ETH at $140, but what about $1,400, or $14,000? I see ETH as a venture capital play for a decent passive income in the future. If I am right and ETH fulfills it’s potential in the medium to long term, I’m looking at earning passive income in perpetuity on what could be the largest smart contract platform on the planet. If I am wrong, I lose my investment. Nothing ventured, nothing gained.
Thanks for reading. Do you hold any ETH that you plan to stake (32 or otherwise)? Please let me know what you think in the comments below.