Revenue Share
What it is and why it benefits us all
Last updated
What it is and why it benefits us all
Last updated
Ethernodes V2 has a clear appeal for our customers: a higher-than-market APR by sharing the revenue from our activity as a Node Operator (NO) with our customers. Thus, the APR generated by an Ethereum deposit in Ethernodes will always be higher than what the market can offer for the same activity.
But, why do we want to share part of our commissions and business volume with you? "Unity is strength," as the popular saying goes.
The Staking sector, in its Node Operator aspect (that is, one that provides the necessary infrastructure for the operation of a network in exchange for a fee) has few players in Ethereum (ETH). This is because to make maintaining an ETH staking infrastructure profitable, two key elements are needed:
Specific technical knowledge
A minimum ETH trading volume to make it scalable
In the same way that a company does not consider building a car production line to produce a single car... a Node Operator does not create an infrastructure to manage a single validator. That is, it is necessary to scale to have a minimum volume of cars (Ethereum validators) that offset the cost of all the necessary infrastructure.
At Ethernodes, thanks to the aggregation of our clients' funds, we are able to establish direct relationships with the main Staking (Liquid) protocols for the benefit of both our clients and ourselves. Therefore, Ethernodes is feasible thanks to the ability our clients give us when making deposits on the platform... as we build fruitful relationships in the sector.
In this article you will find the profitability generation layers of Ethernodes V2 broken down. You will learn how at Ethernodes we are able to offer higher than market profitability without deviating from the pure staking activity.
Consensus rewards are the most common rewards that occur in Ethereum when performing staking activity. An Ethereum validator produces a consensus reward every time they sign a block. Or what is the same, each time it verifies (consensus) with the rest of the validators, that the generated block is correct.
The amount generated by consensus in each block is small, but stable and constant. It represents approximately ~3% of a validator's staking rewards. It is the majority of the reward that occurs in the validation process.
Additionally, there are other types of rewards that we can consider consensus, not so common, but existing. For example, what are known as "sync committees", periodic committees of a few validators in charge of certifying the correct synchronization of the network, generate a large volume of consensus rewards for the duration of the committee (just over a day).
This reward layer is one of two that are included in the rewards of any Ethereum staking service, after deducting applicable fees.
This second reward occurs every time a managed validator is tasked with producing a block (the task is random). When this happens, the validator must select the transactions to include in the next block, produce it, and include it in the chain. By doing this work, the validator will charge the block production fees, which also includes the MEV (Maximum Extractable Value) captured in the block.
The amount of Ethereum that a block generates will depend on the transactions it includes and the MEV that the validator has applied, and can range from 0.001 Ethereum to 10 or more Ethereum. Normally, the figure stands at approximately 0.03 Ethereum.
This second layer of rewards is the second of the two layers that are included in the rewards of any Ethereum staking service, after deducting any applicable fees.
The third layer is where Ethernodes begins to increase the profitability of its clients' deposits. A Liquid Staking (LST) protocol is one that receives deposits from clients to stake, in exchange for giving them a token representative of their deposited token... so that they can use it in other DeFi (Decentralized Finance) protocols in exchange for profitability.
In turn, the LST protocol, with the deposits received, must offer the staking profitability to the users who have made the deposit... so it needs Node Operators (Here we come in!) to carry out these operations. In a perfect world, the LST protocol could divert volume to any Node Operator (NO) in exchange for a fee for their work. But, how can the LST protocol manage the selection of NOs? What if that operator decides to take malicious actions? How can NO be encouraged to have exemplary performance?
In the Ethereum ecosystem, all these issues are resolved, in an elegant way, by forcing the NO to contribute a certain amount of tokens to the validator, so that the capital to build it is mixed: the NO contributes a certain amount and the LST protocol complements it. to reach the 32 Ethereum needed to create the validator. In the event that the NO performs malicious actions or performs poorly, the LST protocol will use the collateral provided by the NO to compensate for possible losses. Thus, an elegant and aligned balance is generated with respect to the interests of both parties.
The LST protocol incentivizes the NO with a fee regarding the performance generated by the proportional part contributed by the protocol itself, while the NO obtains 100% of the return on the capital contributed by the NO itself.
What a mess, right?!
By depositing in Ethernodes, you will be participating in LST protocols in this model... and receiving a portion of the fees generated by the contributions of these protocols to validators built with Ethereum deposited in Ethernodes.
In the following image, you can see how Rocket Pool, an Ethereum Liquid Staking protocol, works. With it, you can get an idea of how the process works at a high level in the relationship of Users - Protocol - Node Operators. Ethernodes collaborates with top LST protocols in this model: Stader, Diva o Rocket Pool are examples of this.
We continue to advance one more level. If in the previous layer we were talking about LST protocols that required an Ethereum deposit to guarantee that both NO and the LST protocol are aligned in their objectives... in that layer we eliminate that need to provide a guarantee. But by doing that, wouldn't we be putting the LST protocol at risk to malicious actions?
In this case, accessing the possibility of acting as NO without collateral requirements is reserved for operators with recognition and track record. Just as anyone can operate in LST protocols as an operator if they provide collateral, only a few currently can act as NO without providing collateral. At the end of the day, you are receiving volume to manage and charging a fee "without risking anything" in exchange for anything other than reputation.
At Ethernodes, as a recognized player in the sector, we can access these managed volumes. And we do it, in part, thanks to the volume we manage of our clients who deposit in Ethernodes. Therefore,
A portion of the fees generated by Ethernodes as a Node Operator in LST protocols without requiring collateral, is shared with clients who have active deposits in Ethernodes. One more layer of profitability... Differential in the market!
Ultimately, we have a final layer of profitability... Maybe something more exotic! By operating with a relevant volume of different protocols, Ethernodes can be incentivized by the use of certain infrastructures (such as DVT) or by committing certain volumes to certain protocols.
Ethernodes implements the distribution of tokens of these protocols with which it collaborates as incentives to its clients with active deposits. Although it is not a direct profitability in Ethereum, they are highly attractive projects linked to the Ethereum ecosystem.
The last layer is the "airdrop" of tokens to Ethernodes clients, as part of the incentive program that we can carry out.
Layer 5 of Ethernodes has a somewhat different operation than usual, in which we limit distributions to large deposits, and promote distribution to users with small deposits. If you want to go a little deeper about it, here we explain how it works in detail.
The set of Ethernodes V2 reward layers marks a differentiating point compared to the Ethereum staking market. Simple, transparent, competitive... and different!
You dare? Make your deposits in app.ethernodes.io
