ether.fi

Staking

ether.fi is a non-custodial liquid staking protocol that lets you stake your Ethereum without giving up control or custody of your funds.

Risk Rating
Good
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
ether.fi is the only liquid staking platform where stakers keep control of their keys while natively restaking to earn additional yield.
What we like less
ether.fi is subject to more smart contract and slashing risks due to its native restaking in EigenLayer. Withdrawals are also subject to an additional 7-day delay.
What it means for you
Users can deposit their ETH on ether.fi to mint eETH and earn additional rewards without locking up their assets. eETH can then be deployed across the DeFi ecosystem to earn more yield.
Information
Exploit/Hacks
None
Info
Key Metrics
  • TVL: $3.4B (Rank #9)
  • TVL Ranking by Staking: #0
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $3.41B
Risk Assessment
Good
Protocol Code Quality
  • Code reviewed by several experienced auditors including CertiK and Zellic
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched in 2023; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 10% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No death spiral concerns
  • This protocol is susceptible to risks related to staking a token to secure a network, such as slashing events
Things to know about ether.fi

How ether.fi works

ether.fi is a decentralized, non-custodial delegated taking protocol with a liquid staking token (LST). The protocol strives to enhance Ethereum's decentralization by simplifying the process of non-custodial staking. The platform is designed to attract a wide range of users, from Ethereum newcomers to power users. It offers various participation methods, such as minting the eETH LST, Solo Staking, and options for both bonding a smaller amount of ETH and staking a full 32 ETH Validator. By making the process more accessible and diverse, ether.fi contributes significantly to Ethereum’s decentralized ecosystem. One of the key differentiators for ether.fi compared to other competitors is that stakers have complete control over their validator keys. These keys are necessary to trigger the exit of validator nodes. The protocol mints an NFT for every validator that it launches. ether.fi uses T-NFT and B-NFT to represent a staker's claim on their staked ETH. The T-NFT is transferable for liquidation to ETH or eETH, while the B-NFT is bound to the user who generates and retains the validator key. The B-NFT represents ownership of the validator keys, and the holder is responsible for exiting the node when necessary. In exchange for the additional responsibility, the B-NFT holder earns 50% higher yield than the T-NFT and eETH holders. eETH is ether.fi's rebasing liquid staking token that is minted from a liquidity pool containing these NFTs. This means eETH always represents a 1:1 claim on the underlying staked ETH.

How ether.fi makes money

The revenue model of ether.fi is similar to other liquid staking protocols. Primarily, the platform generates income through fees associated with its staking services and the node services marketplace. For its staking services, the protocol charges a 10% commision rate on staking rewards. Of the 10%, half goes to node operators and half goes to the protocol treasury. The node services marketplace allows stakers and node operators to engage in mutually beneficial transactions where stakers and node operators can enroll nodes to provide infrastructure services. The revenue from these services is then shared with stakers and node operators.

Risks associated with ether.fi

Participating in ether.fi is not without risks. Firstly, while ether.fi takes extensive measures to secure validator keys and transactions, risks associated with smart contract vulnerabilities or key management errors persist. Users must also consider the potential for slashing penalties if validator nodes they are connected to perform maliciously or inaccurately. There is also additional slashing risk as the deposited ETH will be restaked through EigenLayer to earn additional rewards. Lastly, ether.fi’s innovative approach, while beneficial, is still relatively new and untested on a large scale, which could introduce unforeseen challenges in its operation and integration within the broader Ethereum ecosystem.