Comparison of Ethereum and Polkadot Staking Mechanisms and Derivation Development Analysis

With the upcoming Ethereum Shanghai upgrade, the launch of the staking withdrawal feature has garnered widespread attention. This article will compare the staking mechanisms and current status of Ethereum and Polkadot, and briefly analyze the development of the derivation track for both.

stake mechanism

Ethereum adopts a Proof of Stake (PoS) mechanism, where validators need to hold 32 ETH to stake. Validators run the main Beacon Chain node and multiple validator clients, being randomly assigned to a "committee" to validate network shards. Ethereum 2.0 requires a large-scale set of validators to provide availability and validity guarantees, with at least 111 validators needed to run the network for each shard, and 256 validators required to finalize all shards within a period.

Polkadot uses a Nominated Proof-of-Stake (NPoS) mechanism, which includes "validators" who run nodes and "nominators" who nominate validators. Nominators can earn rewards without personally running machines and can join a nominator pool to lower the participation threshold. NPoS allows for a smaller validator set required by Polkadot, with about 10 validators needed per parachain. The Polkadot network currently has 297 validators, and it is expected to require 1000 validators at maturity, which is why the "Thousand Validators Plan" was launched.

Current Stake Data

As of recent data, Ethereum has 16.44 million ETH staked, with a staking rate of 14.3%, 513,000 validators, and a staking yield of 4.32%, which adjusts to an inflation-adjusted yield of 4.55%. Polkadot has 592 million DOT staked, with a staking rate of 46.4%, 455,000 nominators, a historical staking yield of 15.39%, and an inflation-adjusted yield of 8.26%.

For PoS chains, the higher the staking rate, the more secure the network. The staking rate of Ethereum is relatively low, possibly due to the inability to withdraw staked ETH under the current version. After the Shanghai upgrade, withdrawals will be supported, and the staking rate may significantly increase. The ideal staking rate for Polkadot is 50%, but it mostly maintains between 40% and 60%.

Lock-up Period

The ETH currently staked on Ethereum cannot be withdrawn, but it can be withdrawn after the Shanghai upgrade, with a lock-up period of 27 hours. The lock-up period for Polkadot staking is 28 days. A longer lock-up period increases the security of the protocol, but it may reduce the attractiveness to stakers.

Stake Threshold

Ethereum natively only supports self-running validators, requiring 32 ETH and dedicated computers. There are third-party node hosting services available on the market, still requiring 32 ETH.

Polkadot natively supports four types of stake methods: running a validator (approximately 1.6 million DOT), direct nomination (approximately 264 DOT), running a nomination pool (requires 200 DOT), and joining a nomination pool (minimum 1 DOT). Polkadot provides a "staking panel" website for easy operation.

Polkadot offers more native staking options with a minimum threshold of just 1 DOT, and some require no technical knowledge, which is beneficial for attracting more participants and increasing the level of decentralization and security of the network.

Liquid Staking

Liquid Staking Derivatives (LSD) allow users to earn staking rewards while maintaining liquidity of funds. The proportion of liquid staking on Ethereum is high, with approximately 44% of staked ETH being done through liquid staking, and the Total Value Locked (TVL) reaching 10 billion USD, with Lido holding a dominant position (73.42% market share).

The TVL of the Polkadot ecosystem's liquid staking products is relatively average, mainly including Lido, Acala, Bifrost, and Parallel on Moonbeam, with a total TVL of approximately 50.44 million USD, a low penetration rate, and significant growth potential. Liquid staking products developed based on parachains have advantages such as ease of cross-chain integration.

Summary

| Feature | Ethereum | Polkadot | |------|--------|------| | stake mechanism | PoS | NPoS | | stake rate | 14.3% | 46.4% | | Adjusted Inflation Stake Yield | 4.55% | 8.26% | | Stake Lock-in Period | 27 hours after Shanghai upgrade | 28 days | | stake threshold | 32 Ether | minimum 1 DOT | | Liquid Staking | Large market size, concentrated | Small market size, decentralized |

The staking rate of Polkadot is higher than that of Ethereum, offering more native staking options with a lower entry threshold. The liquid staking market of Ethereum has developed significantly. With the Ethereum Shanghai upgrade and the popularization of liquid staking in the Polkadot ecosystem, the landscape of both may undergo significant changes.