After hodling some ETH I was thinking of a way to let the it work for me. Who does not want his money work for him, right? Pretty quickly I found a way to stake your ETH trough LEDGER and that is what I want to describe in this article. Keep in mind that this is not financial advice and only for pure educational purposes.
HOW TO STAKE
So what did I find out? Ledger has a partnership with Lido. You are able to access their app through the LedgerLive app. But how does it work? Normally, you would need 32 ETH to be able to stake your ETH and earn some rewards. But not with Lido: Here you can delegate a smaller portion of your ETH to Lido and start earning rewards.
Sounds pretty cool right? But there is some relevant information you need to know! Once you stake your ETH you have no access to it until ETH 2.0 rolls out! (That should be in about 1.5 years time?) So does that mean that you are completely stuck? No, because for your ETH you are getting stSETH (probably stands for “stakedETH) which is valued 1:1 as ETH. That means all your rewards will be payed out in stETH and after 1.5 years you can swap them back to ETH.
Furthermore, you can sell your stETH if you need to liquidate. That means that you can not get your initial staked ETH back. Which would make sense because you liquidated your placeholder. Another problem with that is that not every exchange accepts stETH which makes liquidating so much harder.
On the other hand, if you want to earn some rewards on your ETH and you are holding it for the longterm, this is a good way to put your ETH to work. It is probably one of the safest ways because the stETH would be still on your Ledger device and under your own control. So if you are getting interested in start staking your ETH here are the steps:
CONCLUSION
To summarize it all: Lido is a great way to earn staking rewards on your ETH even though you are locking it away for a longer time. There is always the possibility to liquidate with stETH and it seems like a secure way. What has to be mentioned additionally is the following: If you are swapping your ETH vs stETH and possibly back your holding time of ETH will be set to zero. Some countries on this world have a one year holding period of crypto, after that all of the gains are tax free. In this case, if you want to sell your ETH after you swapped it back from stETH (after the 1.5 years) it counts as “newly bought” ETH. That means to sell it tax free you would have to wait another year! Another drawback would be the transaction fees. Since we all know that the ETH blockchain is not the ceapest one I would think about it twice before sending of my ETH to earn rewards. I calculated it for myself and Just to pay the fee I would have to stake my amount for approximately 3 months just to get the fee back in rewards. Like I mentioned before: if you are here for the long run this could be something for you, but if you want to stay liquid and react to the markets this is probably not the move for you.
Published by ga38jem on PUBLISH0X on the 18th of September 2021
