🧞 Should every staker know how Web3 works? Ethernodes explains

Staking industry now

Jan 27, 2025

Gm and happy Monday frens🖖

Should every Ethereum staker know how to run a validator?

Running a validator involves technical expertise, financial investment, and a deeper understanding of the staking process.

This questions shows the broader debate about how user-friendly or technically demanding staking should be, especially since the Ethereum network aims to scale while preserving decentralization.

Why it's important to explain technical details to all (even retail) stakers:

🎉 What to do in February?
🥩 Creating good staking experience
🧵 DEFAI, future of tokens & ETH recap of 2024
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🔮 Your plans for the February

We've got 4 events next month!

In Hong Kong we'll be hosting our next Telegram Builders Day (Feb 17th) with topics like user acquisition for Telegram apps, successful viral case studies and how to build successful Telegram games!

And in Denver we'll be hosting 3 events:

🥩 Restaking & DeFAI Day (Feb 25th) - expect a day packed with keynotes, workshops, and panels diving deep into the latest in the restaking space.

🧩 Modular & L2 Day (Feb 26th) - side event for web3 developers, tech founders, and enthusiasts seeking in-depth of modular stack and layer 2 scaling solutions.

👾 Agents Day – AI x Web3 (Feb 25th) - where visionaries, innovators, and pioneers will gather to explore the powerful convergence of AI and Web3. Together, we will push the boundaries of what’s possible in building a decentralized, transparent, and equitable future for AGI.

🛠️ Deep-dive: Staking industry now

Should all Ethereum stakers understand the technical intricacies of running a validator? This question highlights a critical tension within the Ethereum ecosystem—balancing accessibility with decentralization. While some believe every staker should contribute technically, others argue that simplifying the staking process is essential to onboard the next wave of users.

A significant number of stakers rely on centralized exchanges for ease of use, while solo stakers—who represent only 1% of the network—shoulder the responsibility of preserving decentralization.

This raises a larger issue: can Ethereum scale while maintaining its decentralized ethos?

Session by Lucas Guasch (CEO & Co-Founder @ Ethernodes) in Bangkok. Watch the full version here.

Challenges in the ecosystem

Ethereum’s staking ecosystem is constrained by several key challenges that slow its growth and decentralization:

Barriers for solo stakers: Solo staking requires a minimum of 32 ETH, alongside technical expertise to operate a validator securely. These high entry barriers exclude many potential participants.
Declining incentives: Solo stakers currently earn an annual yield of approximately 2.9%, translating to around $300 per validator per year. This low reward, combined with the risk of slashing, deters broader participation.
Centralization of validators: Roughly 30% of Ethereum validators are managed by just ten operators. This concentration of control conflicts with the ideal of a decentralized network.
Scaling vs. decentralization: Scaling Ethereum requires institutional investments and significant capital, often leading to centralization. As a result, there is an ongoing trade-off between rapid growth and maintaining decentralized governance.

The role of solo stakers

Solo stakers play a pivotal role in Ethereum’s ecosystem by safeguarding its decentralized infrastructure. Despite their low numbers (1% of the network), they act as the “community shield” against centralization. However, the future of solo staking faces uncertainty:

Lack of Financial Viability: The rewards for solo staking are insufficient to incentivize continued participation. Solutions like liquid staking protocols lower the capital barrier but fail to provide meaningful returns for solo stakers.
Technical Complexity: Tools like Dappnode aim to simplify validator operations, yet even technically inclined users struggle to navigate these systems effectively.

Without intervention, the importance of solo stakers could diminish, leading to increased reliance on centralized staking solutions.

Balancing scaling and decentralization

Ethereum’s growth depends on achieving a balance between scaling the network and preserving decentralization. Scaling requires significant capital and infrastructure, often provided by institutional investors and centralized entities.

However, this reliance risks concentrating control and undermining Ethereum’s decentralized ethos.

While large-scale investments are essential for rapid expansion, the ecosystem must remain vigilant to ensure that the core principles of decentralization are not compromised in the process.

Possible solutions

To overcome these challenges, the ecosystem must explore solutions that support broader participation while maintaining decentralization. Improving incentives for solo stakers, such as offering higher rewards or reducing operational risks, could help sustain their contributions.

Additionally, simplifying the staking process through user-friendly tools like Dappnode or liquid staking protocols may encourage more users to participate.

By fostering collaboration between developers, community members, and institutional stakeholders, Ethereum can create a sustainable path for growth that aligns with its decentralized vision.