The StakeWise Protocol
Introduction
StakeWise is a liquid staking protocol for Ethereum, designed to make staking more flexible, secure, and accessible.
Rather than consisting of one large staking pool, StakeWise has a network of permissionless, customizable, and non-custodial staking pools deployed by various service providers, allowing individuals and organizations to pick which nodes will stake their ETH, helping them find the most suitable staking arrangement. All pools offer on-demand liquidity and DeFi integrations for users' stake via osToken, providing the flexibility to get the token only when needed.
The protocol is implemented as a mix of both upgradable (via dual governance) smart contracts that must keep up with the changes in Ethereum's Proof-of-Stake specification, and persistent, non-upgradable smart contracts designed to prioritize security and self-custody, and to function without centralized intermediaries who may selectively restrict access to the service.
StakeWise was formally introduced with the release of its Litepaper in 2022 ↗, which set out the vision for a modular staking protocol designed to counter centralization risks and expand user choice. Since then, the protocol has continued to evolve to embody the core ethos of Ethereum and DeFi, specifically the non-custodial, trustless nature that allows self-sovereignty to truly thrive.
Most users lack either the technical expertise to run validator nodes or the 32 ETH required to stake. StakeWise addresses this by providing an essential base layer that lowers both technical and capital barriers to ETH staking.
Understanding Liquid Staking
What is Staking?
Staking is a
One of the important fields of the validator object ↗
is the effective_balance2,
which represents the validator's "active" balance and determines its influence in the protocol.
This balance serves as the validator's "weight" in consensus duties, which are:
- Attesting to its view of the chain3
- Proposing beacon chain blocks
- Signing off on blocks in the sync committeesthat supportlight clients
The Beacon Chain uses both rewards and penalties to incentivize proper validator behavior4. Reward amounts are calculated based on mathematical formulas considering multiple variables, participation rates, timing, and network conditions5. Validators also earn rewards from priority fees and MEV (Maximum Extractable Value).
Learn more about rewards and penalties — ethereum.org ↗
The Traditional Staking Dilemma
Traditional PoS staking follows a simple premise: lock tokens and earn rewards. While this model secures the network, it has a major drawback — staked ETH is illiquid. Once staked, it cannot be used elsewhere in decentralized finance (DeFi). This creates a fundamental dilemma: stakers must choose between earning rewards and keeping their ETH liquid, but never both.
Solution
Liquid staking transforms your stake into a tradeable asset through tokenization. When you stake through a liquid staking protocol, you receive liquid staking tokens (LSTs) representing your claim on the underlying staked assets plus accrued rewards. Unlike native staking where tokens are locked, LSTs remain liquid and
- Staking rewards from your underlying validators;
- DeFi yields from a multitude of opportunities: collateral for lending, yield farming strategies, or trading on decentralized exchanges (DEXs);
… while keeping your stake transferable and easily convertible back into ETH.
Liquid staking represents an epistemic shift in how staking works. With LSTs, you maintain exposure to staking rewards while having liquidity, breaking the disjunctive premise of traditional staking.
Staking Options
In order to participate in the Ethereum consensus mechanism, a staker must deposit 32 ETH.
The default way to stake — called solo staking — can be prohibitive because of the minimum required 32 ETH and the technical expertise required to run a node. This accessibility barrier led to the emergence of staking service providers that require no programming knowledge or hardware setup: staking-as-a-service (SaaS) and centralized exchanges (CEXs). However, both come with significant concessions: SaaS providers still require the full 32 ETH minimum and offer no liquidity benefits, while centralized exchanges have one fundamental flaw — centralization, which contradicts crypto's core decentralization principles.
Decentralized liquid staking protocols emerged as a response — they don’t have a deposit minimum, instead “pooling” capital from many depositors, and issuing tokens that represent depositors’ share of the staking pool. These tokens are typically tradable on decentralized exchanges and are accepted as collateral in lending protocols, enabling frictionless entry and exit from staking, as well as participation in DeFi.
By nature of their service, liquid staking protocols are non-custodial and permissionless. However, their weakness is the standardized nature of the service — users don’t have the flexibility to control how and on what terms their assets are staked, and must always stake ETH on third-party nodes to access liquidity, commingling assets with other depositors. Such protocols also mostly rely on opaque node operator sets, often creating centralization around dominant node operators and leaving participants without transparency about stake allocation.
This opens room for an innovative approach to liquid staking pioneered by StakeWise.
What is StakeWise?
StakeWise is a liquid staking protocol that gives you the benefits of permissionless and non-custodial liquid staking without the trade-offs.
Operating across Ethereum and Gnosis Chain, StakeWise creates a comprehensive staking network that serves diverse participants through three distinct approaches:
Vaults →: For advanced users seeking full control, choose from diverse staking pool offerings with distinct fee structures, MEV strategies, and risk profiles, empowering you to easily earn staking yields with complete control over your assets and validator selection. Instant liquidity and DeFi integrations are available on-demand by opting to receive osToken when staking.
One-click staking →: For users who want to start earning immediately without thinking twice, go for streamlined staking that automatically allocates your stake across proven Vaults that minimize fees and maximize your yield. osToken is issued automatically, granting access to instant liquidity and DeFi by default.
Run own Vault →: For users and organizations that seek to run their own nodes to access liquidity for their stake, or offer a staking service to others, Vaults allow you to set up isolated, non-custodial, and customizable staking environments that preserve optional access to liquidity via osToken. Vaults already handle billions of US dollars worth of staked assets, powering solutions from MetaMask ↗, Chorus One ↗, Blockchain.com ↗, Ledger Live ↗, and others.
StakeWise also continuously develops innovative strategies to maximize your rewards, such as Boost →, with more features coming soon.
Architecture
StakeWise's modular architecture is built on three foundational pillars: Vaults, osToken, and Oracles.
Vaults — Customizable Smart Contracts
Vaults are isolated, highly customizable smart contracts that function as individual staking pools. Pool operators can accept deposits from stakers, earn fees, and offer tailored staking services. This open marketplace model democratizes liquid staking, giving you the freedom to choose how and where to stake.
Key Features
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Permissionless & Customizable: Launch your own Vault without approval, control fees, MEV strategies, and validator selection. Make your Vault private or
OFAC-compliant. -
Open Marketplace: Choose from diverse Vaults based on your preferences for decentralization, yield, or specialized strategies.
-
Risk Isolation: Each Vault operates independently — issues in one do not affect others.
Deep Dive
Learn more about Vaults →
osToken — Overcollateralized Staking Token
osToken is StakeWise's liquid staking token: osETH on Ethereum and osGNO on Gnosis Chain. Designed with safety and composability at its core, osToken accrues staking rewards while maintaining full liquidity for DeFi participation. It can be minted by staking in Vaults or acquired directly on a DEX to start earning rewards instantly.
Key Features
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Protected & Rewarding: Overcollateralized by design, with auto-compounding rewards and integrated slashing protection.
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DeFi Ready: Fully composable and compatible with lending, trading, and yield-farming protocols.
Deep Dive
Learn more about osToken →
Oracles — Decentralized Infrastructure Layer
The decentralized Oracle network connects StakeWise smart contracts to Ethereum's
Key Functions
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Validator Lifecycle: Manages validator registration, consolidations, rewards, penalties, and exits.
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Token Stability: Maintains accurate osToken exchange rates and safeguards peg stability. Learn more →
Deep Dive
Learn more about Oracles →
Governance & SWISE Token
StakeWise is governed by its community through the SWISE token. Holders vote on key protocol parameters—such as fees, oracle selection, and upgrades—via StakeWise Improvement Proposals (SWIPs).
Join Us
Get involved in shaping the protocol's future by participating in StakeWise Forum ↗
Future Vision
StakeWise aligns closely with Ethereum’s roadmap, proactively researching and adapting to upcoming changes to ensure optimal performance. The protocol remains committed to fostering decentralization, a cornerstone for Ethereum’s long-term health.
1. Users submit transactions to the network of nodes, and the goal of the consensus protocol is that all correct nodes eventually agree on a single, consistent view of the history of transactions. That is, the order in which transactions were processed and the outcome of that processing. ↩
2. Unlike the actual balance (which changes with every block), effective balance updates only once per epoch. It also "snaps" to the nearest 1 ETH increment due to a mechanism called hysteresis — this prevents constant fluctuations from affecting consensus calculations. ↩
3. Each attestation contains three votes: a source checkpoint vote, a target checkpoint vote (both for Casper FFG finality), and a head block vote (for LMD-GHOST ↗ fork choice). More on Gasper consensus in the whitepaper ↗ ↩
4. Validators earn rewards for contributing to chain security and face penalties for failing to contribute. Receiving a penalty is not the same as being slashed. Being slashed is a severe punishment for very specific misbehaviours (that could potentially be part of an attack on the chain), and results in the validator being ejected from the protocol in addition to some or all of its stake being removed. Penalties are subtracted from validators' balances on the Beacon Chain and effectively burned, so they reduce the net issuance of the Beacon Chain. ↩
5. For detailed reward calculations and formulas, see: eth2book ↗ ↩