Is This the Best Platform to Stake Your Ethereum?

February 6, 2024

Ethereum Holds Critical Support But Faces Uncertainty at Resistance, Analyst Says ETH Could Go As Low As This Level Before Halving

Decentralized staking derivative platform EigenLayer reopened its protocol vault this week, enabling another round of ETH and tokenized staking asset deposits. Analyst Thor Hartvigsen has shared a comparison of the accrued yields from restaking currently.

Hartvigsen notes that locked ETH earns 1 point per hour under EigenLayer’s incentive program. And with those tokens trades for $0.18 currently.

“Each restaked $ETH earns 1 point per hour (so 24 points per day per ETH.) On Whales Market, EigenLayer points are going for ~$0.18 per point. According to this, 1 ETH earns $4.5 per day – not very impressive?”

Factoring token launch valuations, Hartvigsen suggests points seem potentially underpriced given ambitious $15–$20 billion targets for EigenLayer’s governance token Eigen. However, without clarity on program length, actual incentives remain difficult to forecast reliably.

Small depositors may find appeal in loyalty-tier structures that boost rewards. But in raw yield terms, other staking options currently provide better nominal returns on a risk-adjusted basis.

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So in essence, while EigenLayer works towards an intriguing model for concentrating staked ETH liquidity using options, the incentive design seems to need reworking. Unless secondary token valuations or added incentives from airdrops come to fruition, putting ETH to work on the protocol in its current form fails to satisfy yield hunters relative to alternatives like Lido or Rocket Pool that simplify rewards.

As a longer-term bet, ETH parked on the protocol likely outperforms strictly holding ETH itself, depending on execution.