How MetaMask says it can beat cheaper rivals as it widens Ethereum offering

How MetaMask says it can beat cheaper rivals as it widens Ethereum offering
DeFi
Matthieu Saint Olive, a senior product manager at Consensys, said MetaMask will charge Pooled Staking users 15%. Credit: Darren Joseph
  • MetaMask users can now stake small amounts of Ether through the wallet.
  • The new offering charges higher fees than market leader Lido.

MetaMask is going all in on the $116 billion market in Ethereum staking.

Consensys, the firm behind the top crypto wallet, announced Wednesday the launch of Pooled Staking, a new offering that will let those with small amounts of Ether pool their tokens and earn staking rewards.

“It’s a simple way to be rewarded for contributing to the security of Ethereum,” Matthieu Saint Olive, a senior product manager at Consensys, told DL News. “This solution will be competitive.”

Previously, only users with 32 Ether could stake through MetaMask.

The Pooled Staking launch puts MetaMask on an equal footing with other staking providers that accept small amounts of Ether for staking.

But it could be an uphill battle for MetaMask to break into this highly-competitive market.

Saint Olive said MetaMask will charge Pooled Staking users 15% of their staking rewards for its service — much higher than leading Ethereum staking provider Lido’s 10%.

The market for Ethereum staking is huge. Almost 33 million Ether tokens worth $116 billion are staked on the blockchain, earning at least 3.1% per year, paid in Ether.

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Lido dominates the market, accounting for almost 29% of all Ether staked.

Ethereum staking

By providing a more accessible option to MetaMask users, Consensys is hoping its Pooled Staking feature can compete against dozens of other options, many of which, like Lido, offer lower fees.

Staking fees

Staking on Ethereum is complex.

It requires in-depth technical knowledge, a stable internet connection, and a minimum of 32 Ether — worth $113,000. Mistakes can cause significant financial losses.

Because of this, many Ethereum users choose to stake through a third party provider.

Staking providers usually take a percentage of rewards — between 10% and 25% — in exchange for helping their users stake.

At the low end, Lido, Binance Staked ETH, and Mantle Staked ETH charge a 10% fee on staking rewards.

Coinbase’s Wrapped Staked ETH sits on the high end, charging 25%.

MetaMask’s 15% Pooled Staking fee, Saint Olive says, falls somewhere in the middle.

“Users care more about the rewards they actually receive, and how secure the solution is, rather than the provider fee itself,” Saint Olive said.

Security and convenience

The new offering may appeal to more casual crypto users because of its convenience.

MetaMask users can start staking their Ether via the wallet’s interface.

However, MetaMask also gives users the option to stake through rival staking providers Lido and Rocket Pool — both of which offer lower staking fees — through the same interface.

As for security, Pooled Staking will use the same staking system used by Consensys Staking, the firm’s enterprise-grade staking product.

Consensys says it has received third-party security certifications for both Consensys Staking and MetaMask.

Consensys Staking has 33,000 Ethereum validators with more than 1 million Ether staked, equivalent to 3.3% of all staked Ether, according to the Pooled Staking announcement.

Even so, it says it has never had one of its validators get slashed.

Slashing is when the Ethereum network takes Ether from validators who don’t publish data when they are supposed to, or don’t publish the correct data.

In November, Bitcoin Suisse, a company that provides staking services for institutional clients, suffered a $200,000 loss after nearly 100 of its validators were slashed for trying to publish incorrect data.

In October, 20 of Lido’s validators were also slashed, costing the protocol $45,000.

Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at tim@dlnews.com.