In recent news, the cryptocurrency lender Celsius Network had reportedly staked approximately $75 million of ether (ETH) through an institutional-grade staking service, Figment. Blockchain data unveiled that between May 10th and May 12th, Celsius made fourteen transactions, transferring a total sum of 40,928 ETH into a crypto wallet.
Since the introduction of Ethereum 2.0, investors have shown increased interest in staking their ether to benefit from the 6-7% annual yield. The move by Celsius shows that cryptocurrency lenders are not shying away from the opportunity to utilize their assets, as they hold significant amounts of cryptocurrencies deposited by their users.
This development has raised eyebrows in the community, with some questioning if this is the correct approach for Celsius to take. While staking ETH can indeed generate substantial rewards, the future of Ethereum 2.0 remains uncertain, as the project’s roadmap could still experience delays, and the profitability of staking may vary over time.
While some Celsius Network users might appreciate the lender’s proactive approach to maximizing returns, critics argue that staking such a significant amount introduces new risks. In particular, they argue that Celsius is exposing its users’ assets to potential vulnerabilities in the Ethereum network, as well as in Figment’s staking services.
For instance, possible smart contract vulnerabilities and hacks, as evidenced by the DAO hack in 2016 or the Parity wallet disaster of 2017, could put those assets in danger. Moreover, Ethereum 2.0’s transition to proof-of-stake implies that staked ETH could be slashed or penalized for network misbehavior, which could also impact the funds deposited by Celsius.
On the other hand, proponents of this move point to the fact that Celsius Network has been audited by third-party security firms and has a solid track record. In addition, staking services provided by companies like Figment have proven to be secure and reliable, and the rewards generated can ultimately benefit the users by offering higher yields.
To further ensure user confidence, Celsius Network could consider offering insurance-like solutions to compensate for any potential losses due to staking risks. Additionally, transparency about staking practices and decisions will be crucial in maintaining user trust.
In conclusion, while Celsius Network’s decision to stake $75 million in ETH carries potential risks, it also displays the lender’s determination to take advantage of the opportunities provided by Ethereum 2.0. As more and more companies explore staking, it will ultimately be up to the users to weigh the risks and rewards and decide whether to entrust their assets to such lenders.
Source: Coindesk
